Pivotal enters Nigeria market, set to acquire 37% stake in The Wings
Burdened by lack of expansion opportunities in the retail segment of South Africa’s property market, Pivotal Property Fund is in Nigeria looking to increase its exposure in emerging markets with immense potential.
The company, which recently listed on Johannesburg Stock Exchange (JSE), says it will formally enter the Nigeria property market by acquiring 37.1 percent stake in the upcoming The Wings project – a 15-floor prime grade commercial office building developed by RMB Westport and energy group, Oando, in Victoria Island, Lagos.
“The deal is opportunistic; we are getting into prime real estate on Victoria Island. It ticks all the boxes for Pivotal,” the company’s CEO, Jackie van Niekerk, was quoted to have said in a report, adding that limited opportunities in the retail sector in South Africa’s real estate market informed her company’s new decision.
BusinessDay gathered that the new move would see the property migrate to Mara Diversified Property Holdings (Maradph), a fund still in formation, which will have a primary listing in Mauritius.
Pivotal will initially own 100 percent of Maradph, but will consequently open up the shareholding to other counters who will be able to subscribe for shares as the fund makes its debut on the local bourse.
In an email response to questions from BusinessDay, RMB Westport confirmed the transaction, saying, “the transaction is between one of RMB Westport’s other partners in The Wings project, and not a direct transaction with RMB Westport,” pointing out that the deal had not been fully executed.
“We can confirm that RMB Westport will continue to remain a shareholder and development manager in the project. Neither RMB Westport nor the project is in any way financially constrained,” the firm added.
Van Niekerk explained that the new Maradph fund would be exposed to retail, office and also a big opportunity for a distribution centre, noting that it was still early days to say what market segment the fund would be concentrated on.
To facilitate its entry into Nigeria, Aaron Suckerman, the company’s financial director, said the Nigerian acquisition would be funded by the company as it raised capital through the market in December.
“The funding for further acquisitions incorporated into Maradph will be through in-country dollar-based funding and through its South Africa listing,” Suckerman added.
“Pivotal is not only limiting its exposure to the African continent, but other markets in the long term. “We are thinking globally and not only Africa,” Van Niekerk said.
Pivotal is a capital growth and development company, and not a real estate investment trust (REIT). Thus, it does not pay any dividends as its income stream is reinvested into its development pipeline.
The firm recently announced a R600 million current and future development pipeline which includes the remaining 80 percent of its 72 000 square metre flagship asset, Alice Lane development, near Sandton City. The three-phase mixed-use development is set to be fully completed in 2017 and has already secured tenants including Virgin Active, Standard Bank, Bowman Gilfillan, Sanlam and Santam. Vacancies across its portfolio decreased from 2.1 percent to 1.8 percent, with its retail portfolio showing a vacancy rate of 2.9 percent and 1percent for its office assets.
ODINAKA MBONU with wire reports