Since the recession in 2016, and the currency devaluation that ensued, the office and retail segments of Nigeria’s real estate market, in general, have performed relatively poorly, and the pandemic only worsened things. Most of the prime buildings in Lagos have struggled to keep occupancy and cash flows at good levels, and this has placed a need for some form of cash inflow for them to keep moving.
Typically, asset refinancing happens when a business needs an injection of cash to free up working capital on its existing assets. The Standard Bank Group, who also financed The Wings Towers in Victoria Island is a major financier of commercial real estate projects in Sub-Saharan Africa and makes an ideal lending partner for the Actis team, who have a strong African track record.
The facility captures a $58m refinancing for Actis’ retail asset, Jabi Lake Mall in the Federal Capital Territory, (FCT) Abuja, and a $53m refinancing for its office asset, Heritage Place in Lagos. Both deals include a term facility, a revolving credit facility, and a headroom limit.
They are funded under the Actis Africa Real Estate Fund 2, and The Standard Bank Group is acting as the Sole Mandated Lead Arranger, Lender, Facility Agent Security Trustee, and Account Bank.
The private equity firm is focused on emerging markets and has other impressive assets under its portfolio.
Actis, a private equity firm with a focus on investments in emerging markets is a key player within the Nigerian and Sub-Saharan African real estate space. They were the team behind Ikeja City Mall and are currently involved in a handful of other retail projects in Nigeria, and Cameroon that we are tracking including Twin Lake Mall in Lagos, and The Junction Mall in CBD Kenya.
Here is a brief summary note on the Refinanced Assets.
Jabi Lake Mall is a Grade A retail project developed by Actis in 2016. The c.25,000 sqm mall sits on 2 floors on land measuring approximately 48,000 sqm. It currently has Shoprite, and Silverbird Cinemas as anchor retailers, along the Bala Sokoto way, in Jabi, FCT, Abuja.
Heritage Place is Actis’ answer to the lack of quality Grade A space in the commercial capital of the country. It is located on Kingsway Road, one of Ikoyi’s nerve centers that has become a greater mixed-use hub.
This office tower was developed via a joint venture partnership with Primrose Development Company and is spread out on 14 floors providing over 16,000sqm of lettable office space and 350 parking bays.
It was completed in the first quarter of 2016 and is Actis’ first office development in Nigeria, even though they initially developed an office project, the One Airport Square in Accra.
This is a win for Actis, and we expect that it will encourage similar deals to happen in the future.
According to Funke Okubadejo, who is a Director at Actis, “the recent successful refinancing of the senior debt in our Nigerian flagship real estate assets is a testament to their institutional quality and resilience in the face of the COVID-19 pandemic. Also, we are proud to access this green financing solution provided by SBG, our trusted financing partner, and reflect our focus on the sustainability of our developments.”
We believe that this is a big win for Actis, especially because it is very difficult to refinance Assets in Nigeria. Lenders in this environment are typically skeptical about prime assets, usually about Grade A tenants continuing to pay USD rents; skeptical that tenants will remain in offices especially now that remote work is thriving, and skeptical that buildings will remain well occupied.
Actis definitely have done a good job at convincing the lender that they can still keep moving despite the turbulence. We believe that this will encourage other asset owners to push harder.
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