17 February 2013

Tanzania: Varsity, Mlimani City New Investor to Review Deal

THE future of Mlimani City project after acquisition by a new Botswana- based company, Turnstar Holdings Limited, is a subject of negotiations between University of Dar es Salaam's administration and the new investor.

Turnstar bought Mlimani City Property Development last year in a 77 million US dollars (over 166.2bn/-) deal from Gulaam Husain Abdoola of G H Group which developed the University of Dar es Salaam area with an investment of 80 million US dollars (over 172.7bn/-) in early 2004/5.

UDSM Vice-Chancellor, Professor Rwekaza Mukandara said in Dar es Salaam last week that negotiations on the future of Mlimani City are in progress but did not give details. Turnstar's Managing Director, Jakes Motlhabane, also said in an emailed response to the 'Sunday News' in Dar es Salaam this week that his company is consulting with UDSM administration on the issue.

"We have received your questionnaire and preparing responses to it, bear with us as we have to do this in conjunction with our partners - the University of Dar es Salaam," said Mr Motlhabane while responding to 'Sunday News' questions concerning the project.

When Mr Abdoola signed the agreement with UDSM administration in early 2003/4, the agreement entailed construction of a commercial complex consisting of shopping malls, hotel, car park, residential apartments, office blocks but also University students' hostels and lecture theatres at UDSM main campus. "Not everything agreed has been put in place by Abdoola but now after five years, he has sold it to a new company," said a source at UDSM who questioned the future of the project which is less than 70 per cent complete.

The source said after seven years, Abdoola sold the project at 77 million US dollars which is less than 3 million US dollars despite of what he earned over the period despite failure to meet his contractual obligation of putting up more structures. According to Botswana Stock Exchange (BSE), Turnstar Holdings' earnings after the first six months since acquiring Mlimani City in February last year, increased by 35 per cent.

"The new Tanzanian acquisition has lifted the property titan's interim earnings, contributing P30.8 million (over 6.04bn/-) or 35 per cent of revenues for the period," said a report from the BSE dated July, 2012. The report said Turnstar's revenues of P87.1 million (about 17.56bn/-) for the six months ended on July 31, 2012, with its local operations contributing P56.3 million (about 11.35bn/-).

The group posted P44.9 million in pre-tax profits as the contribution of the new Tanzanian asset bore fruits. In February, 2012, Turnstar finalised the purchase of Mlimani City, a prime retail and office property complex in Dar es Salaam for US$77 million (P557.5 million).

The deal involved Turnstar making an all-share purchase of Island View Limited, which wholly owned Mlimani Holdings. Besides Mlimani City investment, Turnstar's Game City Phase 2 extension also contributed to revenues for the period under review. "Topline rentals (were) as a result of the additional contribution from Game City phase 2 extension which was concluded in 2011 and which is now 98 per cent let, together with annual escalations," the directors said in a statement.

"Mlimani revenues also contributed significantly as bolstered by the US dollar/Pula exchange rate." Mlimani also raised Turnstar's investment property position, raising it from P751 million to P1.3 billion simultaneously impacting its net asset value, which ended the period stronger at P1.03 billion.

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