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SANLAM plans to invest $500m in commercial property in sub-Saharan Africa, which is experiencing higher economic growth than developed countries.
In an interview with Business Day, Thomas Reilly, CEO of Sanlam Properties, said the rationale behind the planned launch of the Sanlam Africa Real Estate Fund was to focus exclusively on commercial real estate across sub-Saharan Africa, which was experiencing higher economic growth than the rest of the world.
"While there are other property development funds operating in sub-Saharan Africa, the Sanlam Africa Real Estate Fund is different because we are not going to be taking on any developmental risks. We are creating a vehicle that has a lower risk profile by only acquiring existing property assets in retail, industrial and offices," Mr Reilly said.
He said Sanlam was active in 14 countries on the continent and seven of these countries — Ghana, Nigeria, Mozambique, Kenya, Tanzania, Zambia and Uganda — were the target countries for commercial property acquisitions.
"There is a misconception that it’s difficult to do business in Africa, but the truth is that it’s easier to do business in certain countries than others in the continent," Mr Reilly said.
He said Africa’s population was experiencing an increase in income, resulting in an increase in household spending.
The first asset in the planned Sanlam Africa Real Estate Fund would be an 85% acquired shareholding in Accra Mall, the largest shopping mall in Ghana, for $65m, Mr Reilly said.
The acquisition of the property from Actis was made jointly with property and investment company Atterbury, which will take half of the 85% stake.
Sanlam CEO Johan van der Merwe said the growth of Sanlam’s Africa business was a key strategic focus.
"This fund adds to Sanlam’s product offering across the region and will have the ability to leverage off the Sanlam footprint already established," Mr van der Merwe said.
Mr Reilly said the fund would focus on completed income-earning assets only and would aim to largely mitigate development risks and those associated with title.
He said the fund would make A-grade investments in dominant commercial property assets in specific countries in sub-Saharan Africa, excluding SA, Namibia, Swaziland and Lesotho.
"It will provide a platform for investors to gain access to attractive US dollar-denominated returns in sub-Saharan countries which are politically stable and have vibrant growth prospects," Mr Reilly said.
Accra Mall measures 21000m² and was developed in 2008 by Actis. It is a dominant A-grade asset in the region with a strong trading history, attracting as many as 135000 shoppers a week and anchored by retailers Shoprite and Game.
Specific details pertaining to the Sanlam Africa Real Estate Fund will be made available to the market later.
Mr Reilly said sectors the fund had a key focus on included commercial, retail and industrial properties.
"This is an exciting time for us to be in Africa, where there is a huge retail explosion driven by retailers locally, and we want to be facilitators of this growth," Mr Reilly said.
By THABANG MOKOPANELE
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