Uchumi Ngong Hyper sold to Thika Road Mall at 2 billion

Retail chain Uchumi is selling the building that hosts its flagship Ngong Hyper outlet in Nairobi as part of a debt settlement plan meant to put the troubled supermarket back on track.

The shop, which is located on Nairobi’s Ngong Road, is being sold to owners of the Thika Road Mall at a price of Sh2 billion, making it one of the biggest real estate deals this year.

Uchumi Ngong Hyper, which sits on 2.5 acres, is one of the retail chain’s prime real estate assets. The retailer has contracted the Nairobi law firm Coulson Harney to oversee the transaction.

Uchumi chief executive officer Julius Kipng’etich said the Thika Road Mall owners have also expressed interest in acquiring Uchumi’s 20-acre piece of land located in Nairobi’s Kasarani area at a price of Sh3 billion.

Mr Kipng’etich said Uchumi needs the money to pay suppliers given the limited options it has to raise funds. “We have weighed the option and come to the conclusion that we cannot go back to shareholders for more money again having just come from a rights issue,” said Mr Kipng’etich, adding that the Ngong Hyper deal is being crafted as a sell-and-lease-back arrangement.

This means Uchumi will remain tenants occupying in the sizeable area of the Ngong Road mall.

“We have noticed that we have been disadvantaged by having operations in areas where some of our outlets have never made profits thereby negatively affecting our revenue,” said Mr Kipng’etich.

He named Tanzania and Uganda as locations where Uchumi outlets are running at a loss and face imminent closure.

Uchumi last week announced that it was closing three outlets in Uganda and that it is in the process of identifying non-profitable shops in Tanzania for possible closure.

Uchumi has written to the Capital Markets Authority (CMA seeking approval for the planned sale of assets and is awaiting the regulator’s response.

John Wambugu, the Uchumi company secretary, said the intended sale ‘had progressed well’ but declined to go into the details, citing buyer-seller confidentiality.

Thika Road Mall director Bharat Doshi on Monday said his team had met the Uchumi management to express interest in the two properties but insisted details of the deal were not immediately available.

“We have held talks with the management of Uchumi Supermarkets expressing interest in properties they have put up for sale but we have to wait for at least two weeks to disclose any details,” said Mr Doshi.

By: By Simon Ciuri- Daily Nation