Gateway Real Estate Africa raises $200m for Kenya, Nigeria, Ghana growth

By David Whitehouse

Gateway Real Estate Africa (GREA) has raised more than Sh21.5 billion in equity and debt to fund its expansion in Kenya, Nigeria, Ghana and Mauritius. The amount will increase by the time the fundraising ends in early October.

According to GREA chief executive Greg Pearson, the organization will use the money to increase investments in data centres, as well as embassy, educational, healthcare and light industry properties. 

Data connection

Africa needs more data centres. Only a third of the continent’s 80 metropolitan areas with a population of more than one million have at least one built-for-purpose data centre, according to the Africa Data Centres Association and Xalam Analytics.

The requirements for the facilities in terms of power, land and water are on a scale that will be “difficult to achieve without more involved government action at national, regional and local levels,” the research argues.

GREA is a private real estate development company based in Mauritius, and it specialises in real estate for multinational companies in Africa. Publicly listed Grit Real Estate Income has a 20% stake in the company. The refinancing will increase debt from less than 20% of net asset value at present to around 40%.

The fund aims to turn Kenya into its hub for East and Central Africa. “The connectivity and the way they have managed Covid-19 is incredible,” Pearson says. “Kenya has positioned itself well.”

In Nigeria, GREA has a partnership with Liquid Telecom through which it is building two data centres. Further centres are planned in Kenya and Ghana.

GREA is also building oncology units in Mauritius in partnership with Artemis from India. Further such facilities are planned in Kenya, Nigeria and Ghana.

After the fundraising, GREA has agreed with its shareholders to become an “evergreen” company with a permanent capital structure, rather than being obliged to provide liquidity exits for investors. There is only one shareholder that still requires a liquidity event.

The firm, which has no exposure to South Africa, mitigates risk with insurance to cover issues relating to repatriation of funds and dollar liquidity. “It does cost us a lot,” Pearson says.

Local hires

Foreign embassies account for about 60% of GREA’s current business. The company charges blue-chip tenants rents in US dollars or euros. Inflation rates around 20% in some African countries mean that some projects would be “unfundable” if local currencies were accepted, Pearson says.

Previous GREA developments include the Anfa Place Shopping Centre in Casablanca, the OBO Ethiopia Corporate Accommodation Tower in Addis Ababa and a Bolloré Africa Logistics warehouse in northern Mozambique.

Key to operating in such diverse territories is understanding tenants’ businesses. “We don’t buy land and then hope to find tenants,” Pearson says. “A lot of multinationals think they have to bring in everyone themselves. We don’t come in and try to do it on our own.”

GREA aims to build “indigenous businesses”, and Pearson says this has worked well to date in Ghana and Mozambique.

Work on embassy accommodation in Kenya in partnership with the non-profit organization Buildher is the first construction project in Africa to be led and managed by women.

Bottom line

African countries need coordinated government strategies to make the most of data-centre growth potential, according to the Africa Data Centres Association and Xalam Analytics.

This article appears in The Africa Report, online version

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