Lango, a South African real estate firm, has agreed to acquire assets owned by Hyprop Investments Limited and Attacq Limited in Nigeria and Ghana.
In a joint statement dated August 12, Lango agreed to acquire Accra Mall, Kumasi City Mall, West Hills Mall (all in Ghana), and Ikeja City Mall (ICM) in Nigeria, “at $200 million”.
According to the statement, the assets were acquired via an issue of Lango shares to the companies, along with part debt finance, with Rand Merchant Bank (RMB) acting as the lead arranger.
Hyprop and Attacq agreed to sell ICM nine years after acquiring the mall in 2015.
Following the completion of the acquisition in 2015, Hyprop held a 75 percent interest in ICM while Attacq acquired the remaining 25 percent.
Speaking on the latest acquisition, Thomas Reilly, chief executive officer (CEO) of Lango, said the transaction is a significant milestone for Lango and not “only fits squarely into our growth strategy, but is also highly accretive”.
“The scale achieved by Lango undoubtedly positions it as a leading Sub-Saharan African firm in the industry. Lango will now have c.US$875 million of assets under management across four countries, with arguably some of the best-performing landmark commercial properties across both the retail and office sectors in select growth cities,” Reilly said.
“These assets are well-positioned to allow Lango to extract synergies and further enhance growth with a high degree of resilience to differing market cycles.
“We are excited to once again take advantage of a highly attractive entry-point in the cycle, adding quality yielding assets in select cities to our asset base at competitive prices, which we believe have the potential to offer strong growth prospects. The business continues to enjoy significant momentum, and we expect this to aid in the delivery of sustainable long-term investor returns.”
On his part, Morne Wilken, CEO of Hyprop, said the firm’s management had previously committed itself to achieving several strategic initiatives, with the exit of Sub-Saharan Africa being one of the last remaining initiatives to be completed.
“The successful implementation of this transaction will achieve this initiative, and we look forward to working with Lango to completion,” he said.
Also, Jackie van Niekerk, Attacq CEO, said, “our Rest of Africa (ex-South Africa) investment has become a small component of Attacq’s real estate investments and has been earmarked as part of an exit strategy by way of an orderly disposal.”
“We are delighted to reach a point where a transaction with a credible counterpart in Lango has been agreed,” Niekerk said.
$200 Million Payment raises questions
Meanwhile, the acquisition price has raised questions. In an X post on Sunday, Bright Simons, vice-president of IMANI, a Ghanaian policy and education think-tank, claimed that the four assets were sold lower than the price announced.
Simons said the four malls were at a “considerable loss for the young firm”.
“When I saw the PR-heavy press coverage, my antenna jacked up since I have been investigating the World Bank’s IFC’s mall investments as part of a long-term project that seeks to understand how and if investments by the World Bank truly benefit people on the ground,” he said.
“First off (no prizes for guessing), the PR that the three Ghanaian malls were sold for $200 million was false…
“And, yes, the World Bank’s IFC is somehow involved in this affair. The company (Lango) that bought the 4 malls began life as an Investec-Growthpoint entity that was funded by the IFC in May 2018 with a $40 million contingent-equity facility.
“Attacq and Hyprop’s stakes in the four malls actually all sold for a total of $60 million. Their stakes in the three Ghanaian malls fetched ~$27 million.
“Consider that in 2017, Sanlam valued the Accra Mall alone (the smallest of the 3 malls) at $129 million, up 100% in value from the $65 million it assessed in 2012 when, together with Attacq, it bought it from Actis.”
According to Simons, Attacq and Hyprop were two mall sellers who were in such a hurry to “leave the Sub-Saharan Africa malls business that they even took their payment in Lango shares, as there was no cash at hand”.
“The buyer itself, Lango, had to restructure its debts in 2021, kind courtesy of a Stanbic facility. Imagine how it licked its lips when it picked up the malls for cheap last week without having to put down any cash,” he added.
“The sellers disclosed net losses on the four malls totaling ~$37 million for FY 2023. It would seem like the original mall financiers – the likes of Actis – got off lightly, since Actis reported a 7.2% exit yield on its Ghana mall holdings when exiting in 2012. Curious though that they declined to provide the actual numbers.”
Simon said by the time Attacq and Hyprop sold the malls last week, the four properties carried a value of “~$179 million, 44.4% less than the total original construction cost of ~$322 million”.
He said selling all their stakes in the four malls for “$60 million, net of debt, and in shares rather than cash”, implies a steep and dramatic erosion in nominal value over time.
Simons added that the two sellers (Attacq and Hyprop) said they “won’t hold the shares received in payment for long”.
