Jubilee Holdings #ticker:JUB has bought Coca-Cola East Africa’s former head office in Nairobi’s Upper Hill at a cost of Sh1.1 billion, with the insurer planning to move its headquarters to the property in September.
The Nairobi Securities Exchange #ticker:NSE -listed firm will lease out part of its current address –Jubilee Insurance House on Wabera Street— which will also continue to house its agents and customer service operations.
“We bought the Coca-Cola building at a cost of Sh1.1 billion. We got a very good deal,” Jubilee Holdings chairman, Nizar Juma, told the Business Daily.
“We are adding one floor and also doing renovations. We expect to move in September.”
Besides the head office, other operating divisions that will migrate to the Upper Hill property include its fund management, life, and health businesses.
The property, which sits on 3.2 acres, had been on the market for more than two years. Coca-Cola announced the sale of the property in July 2019 after moving to a new building in Lavington.
The soft drinks giant at the time said it chose to migrate to a location that is closer to residential areas besides having a working space that is “more open and less formal”.
Jubilee says the expansion and renovation of the newly acquired property will enable it to accommodate its operations. The upgrade will feature the construction of an amphitheatre.
The three-storey complex is currently categorised as a Grade A office with 116,350 square feet of space and 130 parking bays. Other amenities are a sound-proof auditorium, gym, fitness studios, and a cafeteria. Only one acre is developed.
The transaction expands Jubilee’s investment in the real estate market. Through PDM Holdings Limited, the insurance group has interests in Nairobi’s IPS Building, Nation Centre, and Courtyard. among others.
Long-term real investors have benefited from both rental income and capital appreciation, with the latter source of returns dominating in the past two decades.
Jubilee’s purchase of the property continues the trend of companies leaving Nairobi’s central business district to new head offices in Upper Hill and Westlands. Others that have made similar moves are Sanlam Kenya and the Nairobi Securities Exchange.
The corporate migration has been partly linked to the need to acquire more modern offices, with most properties in the CBD built decades ago.
Upper Hill and Westlands have become popular locations for corporate headquarters, hosting banks, insurers, and audit firms, among others.
There is an increased preference for modern buildings that consume less electricity and have more natural light, among other environmental sustainability and efficiency features.
Mr Juma said the company was mainly motivated by the price in buying the property.
“We got a good deal. They had been trying to sell for some time,” Mr Juma said.
Jubilee has raised its dividend payout by 55.5 percent to a record Sh1 billion or Sh14 per share for the year ended December after posting strong growth in earnings.
The company declared a final dividend of Sh8 per share and a special payout of Sh5 per share to reward shareholders after signing an agreement to sell majority stakes in its general insurance subsidiaries to Allianz SE.
The company had already paid an interim dividend of Sh1 per share. The special payout enhances the dividend to a total of Sh14 per share, raising it from the Sh9 paid for the previous year.
The insurer recorded a 67 percent net profit growth to Sh6.8 billion in the review period, helped by investment income and higher net premiums. Investment income rose by Sh4.6 billion to Sh15.9 billion. Net premiums on the other hand increased 8.9 percent to Sh21.9 billion.
The company also booked substantial gains from the ongoing transactions with Allianz SE.
Expenses and commissions rose by a marginal 2.3 percent to Sh9 billion. The company signed an agreement in 2020 to sell stakes ranging from 51 percent to 66 percent in its general insurance subsidiaries in Kenya, Tanzania, Uganda, Burundi, and Mauritius to Allianz for a total of Sh10.8 billion.
The Kenya, Uganda, and Burundi transactions have been concluded and the insurer expects to finalise the Tanzania and Mauritius ones later this year.
Jubilee will receive a total of Sh7.75 billion in the deals with Allianz while Sh3 billion will be invested in the operating businesses in which the NSE-listed firm will retain minority stakes.