Vantage Capital — Africa’s largest mezzanine fund manager — announced on Wednesday that it provided $10m in mezzanine debt funding to Compass Capital — a leading Egyptian private equity firm — to acquire six grade A office buildings in east Cairo.
The acquisition is being made by Compass Capital’s existing real estate company, Bonyan for Development and Trade, which owns and operates the Walk of Cairo — an outdoor retail boulevard in west Cairo.
The office buildings were acquired from Namaa for Development and Real Estate Investment — a private real estate developer and operator owned by the Sallam family.
Located in the heart of New Cairo’s central business district, the properties have an aggregate gross leasable area of 47,200 sqm and are fully rented by multinationals — including Nestlé, General Electric, Johnson & Johnson, and Lafarge Cement — as well as large Egyptian corporations.
The Walk of Cairo — the existing real estate asset owned by Bonyan — is located in Sheikh Zayed City in west Cairo and commenced operations in December 2020.
The open-air mall provides an extensive range of unique entertainment and experiential offerings such as the Museum of Illusions, a wax museum, and an amphitheatre where weekly events are held.
The mall also offers a wide selection of food and beverage, lifestyle, and retail outlets, hosting popular brands that include Natuzzi, McCafé, Espresso Lab, and Core Gym.
The office building acquisition is facilitating the expansion and diversification of Compass Capital’s real estate portfolio.
“There is currently no easy way for investors to gain exposure to a diversified portfolio of stable, yielding real estate assets in Egypt despite this being a major and fast-growing sector of the economy,” explained Tarek Abdel-Rahman — the Co-Managing Partner of Compass Capital.
“Our vision, therefore, is to build such a real estate portfolio with a view to listing it on the Egyptian Stock Exchange. By accessing public capital, further real estate acquisitions could be made over time, enabling the portfolio to keep expanding and diversifying.”
Partner at Vantage Capital David Kornik noted: “The real estate market in Egypt is buoyant and exhibiting robust growth, notwithstanding the onset of COVID. In particular, east and west Cairo have been expanding rapidly, as residents move out of central Cairo to escape the congestion and improve their quality of life.”
“The population of west Cairo alone has grown four-fold over the past four years, from 440,000 residents in 2017 to 1.8m today and is forecast to reach 6.7m by 2027. Similarly high rates of growth are being seen in east Cairo, which currently has an estimated 8m residents. This has fuelled strong demand growth for both retail and office space in these areas, supporting the real estate assets in Compass’ portfolio.”
The transaction represents Vantage Capital’s 33rd investment across four generations of mezzanine funds, with its portfolio spread across eleven countries in Africa.
“The transaction with Compass Capital marks our second investment into Egypt in as many years. With a population in excess of 100m and an economy delivering resilient growth, it is a country with significant potential and a key target market for our firm, as we look to deploy our newly-raised fourth mezzanine fund,” said Warren van der Merwe — a Managing Partner at Vantage Capital.
Africa’s growing population and urbanisation are spurring significant investment into property developments across the continent. Over the years, Vantage has provided substantial financial support to the sector.
This includes funding two neighbourhood shopping malls in Nigeria and Kenya, two mixed-use developments in Lagos and on the west coast of Mauritius, a hotel and commercial property group in Namibia, a leading owner and operator of hotels across Egypt’s Red Sea, as well as two residential property developments in South Africa.