The first NSE-approved Real Estate Investment Company (REICO) in Nigeria was announced on Monday, 21st of November, 2022 as Purple Real Estate Income PLC (popularly known as Purple Group) opened its initial public offering. The public offering which has been set at ₦
10 billion equity offer represents an initial public offer (IPO) of 2 billion ordinary shares at ₦5 per share.
According to the statement released by the company, the proceeds generated from the public offering will be utilized by Purple Group for:
- Debt refinancing – 83%
- Development of Lekki retailtainment (also known as Purple Lekki) – 13%
- Cost of issue refinancing – 3%
- Operational and working capital needs – 1%
- The acquisition of additional income-producing real estate assets from the secondary market.
Purple’s Real Estate Income fund will have a total of five assets that are currently within its portfolio. One of these five assets is already completed and in operation, while the remaining three are in different stages of development. In addition, they have a pipeline of office, hospitality, and purpose-built student accommodation that they intend to acquire. See the list below for more details on these assets.
The assets included in the Initial Public offering that is currently in Purple’s portfolio are:
- Purple Maryland
- Purple Lekki
- Purple Nano
- Purple Urban
- Purple Macro
Additional assets being considered for acquisition include Mansard Place, Lead city student accommodation, and Protea Benin.
Against this backdrop, we provide a review of the five assets in Purple Group’s portfolio below.
Purple Maryland (formerly Maryland Mall)
Location: Maryland, Lagos
Size: 6,500 sqm
Type: Mixed-use development
Occupancy Rate: 98.5%
Probably one of Purple’s most prominent assets, Purple Maryland is a mixed-use development located along Ikorodu road in Maryland, Lagos. The 6,500 sqm development was developed by Purple Group with a project team including:
- Horatio Limited as the Main Contractor
- CMDesign Atelier as the Architects
The mall which was completed in June 2016 has established itself within the mainland with a current occupancy rate of 98.5%. It is a prime location for leisure, lifestyle, commerce, and entertainment with tenants like Genesis Deluxe cinema, Miniso, Stanbic, and Fantasticaland, an arcade. They also have tenants like Workstation that offer coworking services within the mall.
Purple Lekki
Location: Off Freedom Way, Lekki Phase 1, Lagos
Size: 10,250 sqms
Type: Mixed-use development
Value: ₦8.35 billion
Purple Lekki is a mixed-use development currently under construction located off Freedom Way, Lekki Phase 1, Lagos. The G+8 floor building will offer 12,000 sqm of gross leasable area with the ground floor expected to have an open space retail section. The second floor will have an entertainment section, with the third floor planned exclusively for office use. While the remaining fourth to seventh floors have been designated to house Purple Nano – up to 175 units of short and long-stay nano apartments.
Purple Lekki is scheduled to be completed in December 2023 by a team consisting of:
- Jam Architects as the Architects
- Dutum Company Limited serves as the Main Contractors
- ePCM Consultants Limited occupies the roles of Project Manager and Quantity Surveyor.
Purple Macro
Location: Maryland, Lagos
Type: Residential development
Value: ₦1.85 billion
Purple Macro is an upcoming project from Purple Group located in Maryland, Lagos. The G+15 residential development which is currently conceptual is scheduled to be completed in 2025. Once completed, the deluxe-grade skyscraper poised to be the tallest residential building in the Lagos Mainland will offer:
- Mini studio apartments with sales prices ranging from NGN 48 million to NGN 63 million per unit
- Studio Apartments with sales prices ranging from NGN 63 million to NGN 79 million per unit
- 2 bedroom apartments with sales prices ranging from NGN 89 million to NGN 103 million per unit
Purple Urban
Location: Off Admiralty way, Lekki Phase 1, Lagos
Type: Residential Development
Value: ₦3.47 billion
Set to be the third of Purple’s residential assets, Purple Urban is a residential development that will be located right beside Purple Lekki in Lekki Phase 1. Currently, in the conceptual phase, the G+9 floor project will offer a total of 189 units of deluxe-grade apartments composed of:
- 40 units of 2-bedroom apartments with sales prices ranging from NGN 120 million to NGN 127 million.
- 40 units of 3-bedroom apartments with sales prices ranging from NGN 140 million to NGN 161 million per unit,
- 18 units of 4-bedroom apartments with sales prices ranging from NGN 161 million to NGN 181 million per unit and,
- 4 units of penthouse apartments with sales prices ranging from NGN 254 million to NGN 410 million per unit.
Acquisition Projects to be Added to Purple Group’s Real Estate Portfolio.
Mansard Place
Location: Bishop Aboyade Cole, Victoria Island, Lagos
Size: 6,903 sqm
Type: Office Development
Although talks are still ongoing to complete its acquisition, Purple Group is intent on adding Mansard Place to its real estate portfolio. Located in Victoria Island, Mansard place is an iconic B-grade office development that was completed in January 2013 as a joint venture project between APD Limited and Africa Capital Alliance. The project team consists of:
- Cappa and D’Alberto Plc. as the Main Contractor
- Consultants Collaborative Partnership (CCP) as the Architects
Lead City University Students’ Accommodation
Location: Lead City University, Oyo
Type: Student Accommodation
The conceptual Lead City Students Accommodation is Purple’s foray into yet another niche real estate sector. The project development will be completed in phases with sufficient net lettable area to contain up to 1,500 beds in the first phase. With a forecasted net income of 7 billion as of 2022, the project will follow IFC Edge building techniques. Purple aims to deploy this development as the first of many safe inclusive, purpose-built student communities.
Protea Benin
Location: Benin City, Edo
Type: Hospitality
Occupancy rate: 90%
Purple Group is in the process of acquiring Protea Hotel in Benin City. With an offer already made and under consideration, this addition to their portfolio will extend their reach within the country with an Eastern hospitality asset. Once the acquisition is finalized, there are plans in place to create a 50-room aparthotel extension of the hotel, which will add to the current Nano shortlet assets. The 8-year-old property has a forecasted net income of ₦1.5 billion for the year 2022.
Financial Forecast
These assets have been forecasted to generate a 10-year average return on equity of 15.7% and a 10-year average return on assets of 12.1%. By 2031, the assets are forecasted to yield ₦120.8 billion in earnings before interest, taxes, depreciation and amortization with a 57% Profit After Tax Margin. Compared to other active income schemes, notably Real Estate Investment Trusts (REITs) in Nigeria, UPDC REIT offers unitholders 0.28 Earnings per unit attributable to unit holders of the Trust.
While Purple Maryland is already in operation, the other four will need to be completed and acquired to contribute to the group’s revenue streams. The completion of Purple Lekki is one of the priorities of the proceeds from the income fund. So far, Purple has aimed to push the boundaries of what is achievable with their wide range of mixed-use developments housing commercial, residential, and office units within the same property to great success. A trend they’re certain to extend with the funds raised from this public offering.
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We await the result of the IPO as companies interested in raising public funds are sceptical. If the Purple IPO is for instance over subscribed, obviously it will imply the high confidence level of investors in the market. There is a threshold of subscription below which the IPO must be cancelled.