Mauritian PE in Sh9.7bn real-estate deal with Kenyan firms

Real-estate developer AMS Properties and Hass Consult will team up with a Mauritian private equity firm to develop properties worth Sh9.7 billion in the region.

Xterra Capital Advisors, a Port Louis-based private equity firm, has signed an agreement with AMS Properties and property marketing firm Hass Consult to raise $100 million.

The property fund to be raised in September will invest in residential, commercial and hotels across eastern Africa.

“The East Africa portfolio includes large-scale mixed-use developments, new and income earning, commercial properties and upscale hospitality properties.

“The total value of equity capital to be raised by the fund is in excess of $100 million,” said Xterra Capital in a statement.

The private equity firm is investing in Kenya’s real-estate sector which has returns that have in the past couple of years outpaced most peer markets.

“Kenya is an important market in the East African region and in the continent.

“The real-estate sector in Kenya is one of the fastest growing in the continent and has outperformed all emerging markets in terms of returns over the past few years,” said Xterra Capital chief executive Wagane Diouf.

Xterra Capital said the development firms would in addition be given preference shares in the fund management company.

In 2012, a report by Knight Frank and Citi ranked Nairobi’s high-end market as the hottest property market out of 71 cities, while the coastal region was second.

Prices in Nairobi’s prime markets had annual returns of 25 per cent while those at the Coast had returns of 20 per cent.

Looking further backwards property prices in suburbs such as Karen have increased by six times over the last seven years.

Property consultants say the fast rate of urbanisation, growing population and incomes still make the industry attractive.

Hass Consult said the partnership would enable them marshal funds needed to roll out projects.

“Fund mobilisation is key to quick turnaround of projects in our region.

“We have been looking for a partner who has the experience and right skill sets to partner with in various projects in our pipeline,” said Hass Consult property development director Farhana Hassanali-Hashmani.

“The team at Xterra Capital fit that bill and we are excited to be partnering with them.”

Fusion Capital and Cytonn Investments are some of the other players raising billions to finance real-estate projects in the country.