Markets & Finance

Broll acquisition raises Centum stake in real estate

RUNDA

The Two Rivers development that is coming up in Runda area, Nairobi. PHOTO | ERIC WAINAINA

Centum Investments has cranked up its real-estate investment with the acquisition of a 30 per cent stake in Broll, a property management firm.

Shareholders gave the firm’s management the go-ahead to buy a 30 per cent stake in Broll Kenya, the local subsidiary of Broll Group of South Africa, at the listed firm’s 47th Annual General Meeting (AGM) held on August 29, 2014 at its Two Rivers development site.

Both parties declined to disclose the value of the transaction set to result in Centum bulking up its real-estate revenue streams through the management fees.

“Centum’s participation in Broll East Africa, which is part of the Broll Group, the largest commercial property services group in Africa, gives it the opportunity to provide end-to-end real-estate development solutions from land acquisition and masterplanning, development management and project management through to property management,” said Centum in a statement,

Project management and brokering are the other areas that Broll specialises in. The two firms already have a working relationship with Broll which is contracted as the property manager for the Two Rivers mixed development that is coming up in Runda area, Nairobi.

READ: SA property firm opens Nairobi office to scout for deals

Property management firms earn revenues through commission calculated as a percentage of annual rent which can be as high as seven per cent depending on the type of property.

“Normally they charge between five and 7.5 per cent for residential properties and 2.5 per cent and 7.5 per cent for commercial properties’ total rent collected on an annual basis,” said Kelvin Muoria, the development analyst at Mentor Management.

Developments

Knight Frank Kenya chief executive Ben Woodhams said for larger developments such as commercial properties the fees is around three per cent.

While data on the size of the property management industry in Kenya is scanty, Mr Woodhams said based on their portfolio the industry could worth billions. “We manage five million square feet of property with an average rent of Sh100 per square foot per month,” he said.

Broll set up its Kenyan operation in 2013 and has already bagged contracts to manage shopping malls in Nairobi and other counties.

It will also manage Garden City that on completion will be the largest shopping mall in East and Central Africa, The Hub in Karen, Buffalo Mall (Naivasha, Nakuru County) and Tuffoam Mall in Kisumu County.

Shareholders also gave the green light for the ambitious NSE firm once known as ICDCI to deepen presence in the beverage business through King Beverage, a newly formed subsidiary.

“King Beverage Ltd is a wholly-owned subsidiary of Centum that will be involved in distribution of alcoholic beverages,” said Centum.

In June 2013 the listed firm increased its stake in Almasi Beverages to 43.5 per cent from 35 per cent after it bought out minority shareholders in the company that bottles Coca-Cola.