South Africa firm buys 45pc stake in Buffalo Mall

South Africa’s Delta Africa Property Holdings has entered Kenya’s property market after reaching an agreement to buy a 45.5 per cent stake in Buffalo Mall for Sh418 million.

Delta Africa said it will buy the stake from Mauritius-based Abland Diversified Holdings Limited, a company that is fully-owned by South Africa’s Pivotal Fund.

The two firms, which are listed on the Johannesburg Stock Exchange, said the sale will be financed through Delta issuing new shares to Pivotal.

“This is an acquisition by Delta Africa of Pivotal’s entire 100 per cent shareholding in Abland Diversified Holdings Limited (ADH), a Mauritian company, having as its sole asset a 45.5 per cent shareholding in Buffalo Mall Naivasha Limited — a Kenyan company which is undertaking a retail, commercial and entertainment centre development in Naivasha — as well as all amounts owing by ADH to Pivotal, which is to be settled through the issue of the new Delta Africa ordinary shares to Pivotal,” said a jointly-issued statement.

“It is anticipated that the Naivasha Purchase Consideration will amount to approximately $4,089, 000.” The two expect the deal to be finalised by March 2016.

The statement added that the value of Buffalo Mall is around Sh1 billion while the undeveloped land surrounding the Naivasha-based retail centre is valued at S06 million.

The developers, Buffalo Mall Developments Limited, built the mall in late 2013 on a 15-acres of land acquired from the Delamere Family in exchange for a 25 per cent stake in the retail centre.

READ: Delamere group to build Naivasha town’s biggest mall

Lloyd Capital Partners held the remaining 75 per cent shareholding in the mall. Delta Africa also said that it had entered into a similar agreement to buy an office block in Lagos, Nigeria. Both deals are part of the property firm’s expansion into Africa.

“In line with Delta Africa’s strategy to expand its geographical footprint on the African continent, Delta Africa has been seeking strategic partnerships with businesses that have existing structures and detailed knowledge of operating in new target jurisdictions,” said Delta Africa.

Market cooling off

International firms are still showing interest in Kenya’s property market despite signs of the market cooling off after a decade of fast growth.

Growthpoint Properties, the JSE’s largest listed Real Estate Investment Trust (Reit), and Investec Asset Management said they will invest in Kenya’s retail, industrial and office property markets once they identify opportunities. The two are entering the Kenyan market through a Pan-African fund.

READ: SA giant fund Growthpoint targets local property market

“The Kenyan market is certainly one of the more developed and mature markets in East Africa — Nairobi in particular.

‘‘With this in mind, at least in the near to medium term, our Kenyan strategy is likely to focus on Nairobi specific investment opportunities. However, right now, no concrete transaction has been identified or is being worked on,” Thomas Reilly, Investec’s head of Africa real estate, told the Business Daily.