Shoprite Holdings acquisition of 3 malls brightens retail business outlook

The acquisition of three malls in second-tier cities in Nigeria by South African Shoprite Holdings has brightened the gloomy outlook that the retail market in the country has presented in the last eight years. Analysts also see the action as further proof of investor confidence in the economy.

The facilities developed by Resilient Africa, a South African investor in retail space, are Delta, Asaba and Owerri m enthrals completed between 2015 and 2016 with a total gross leasable area of 30,015 square metres.

These malls were part of the company’s drive to build 1,000 malls in Africa with a special focus on Nigeria. Resilient Africa, along with RMB Westport, took the Nigerian retail landscape by storm and were the main drivers of what was seen then as a retail revolution in the country.

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The downturn in the economy of Nigeria that followed the take-off of President Muhammadu Buhari administration in 2015 slowed the expansion of retail business in the country. That too affected the drive of space providers like Resilient Africa to provide more spaces.

Before now, analysts had been upbeat with optimism on foreign interest in the Nigerian market. “There has been a strong interest from notable international brands (not just the regular South Africans) who are eager to come to the Nigerian market in recent time and this enhances the take-off of these malls when delivered”, Chu’di Ejekam, former director at Actis, told BusinessDay.

But the market has seen a tumble which, according to Ejekam, “is in line with the expectation that foreign retailers will begin to exit the market considering the distortion in economic activities, the continued devaluation of the Naira and the weaker consumer market.”

Resilient Africa is a joint venture between Resilient REIT (Real Estate Investment Trust) which has 60.94 percent and Shoprite Holdings with 39.04 percent stake in the venture. In their 2023 annual financial statement, Resilient REIT disclosed the disposal of their stake in the venture.

Following this, Shoprite Holdings advanced a $45 million loan to Resilient Africa in 2021, which was due for repayment in March 2024. According to Resilient, “as the valuation of the properties exceeds the value of the funding, Resilient and Shoprite effectively agreed, after year-end, that Resilient’s portion of the properties will settle its share of the debt. Consequently, Resilient will dispose of its Nigerian operations to Shoprite.

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A recent report by Estate Intel, an online property platform, notes that the acquisition of Resilient’s 60.94 percent stake in the malls makes Shoprite Holdings the sole owner, and further solidifies its presence in the Nigerian retail market, despite the sale of its supermarket network in Nigeria to Ketron Investments, a subsidiary of Persianas Investment, in 2021.

“As such, Shoprite Holdings will serve as the landlord of the acquired retail facilities, each with Shoprite supermarket as its anchor tenant,“ Dolapo Omidire, CEO of Estate Intel, explained.

He explained further that Shoprite Holdings is a different entity from Shoprite Nigeria. Shoprite Holdings is the larger South African Holdco that previously owned and operated Shoprite Nigeria.

“However, while the supermarket chain was sold as mentioned above, they maintained the initial name and branding,” Omidire said.