Purple Real Estate Income Plc (PREIP) has announced an Initial Public Offering of 2,000,000,000 common shares of 50 kobo each at N5 per share.
The offer, which is expected to raise N10 billion, has opened today (Monday, November 21, 2022) and will close on Friday, December 23, 2022 according to offer documents obtained by Naijaonpoint.
Purple Real Estate Income is a technology-enabled real estate business. It started operations in 2014 and is responsible for the development of Purple Maryland (formerly Maryland Mall) among other real estate developments.
Expansion: Chief Executive Officer, Mr. Laide Agboola, stated in the filing that the company is expanding its presence in real estate by offering similar investment-grade assets, including Purple Lekki, an all-inclusive mixed-use center that is based on the lessons from your main asset. He said:
- “PREIP is on track to become the first approved REICO in Nigeria, starting with an initial public offering of 2 billion common shares at N5 per share. The REICO Platform will allow the company to constantly raise capital for the development and acquisition of assets.
- “Purple operates an ecosystem of interconnected real estate products offline and in the cloud. After the IPO, the company will take advantage of the REICO structure to expand its real estate stock, investing in both productive and development assets, in a ratio of 75%:25% respectively.
- “This will allow Purple to offer its investors blended returns that are more attractive than the typical REIT approach of acquiring finished assets that have less potential for capital appreciation.
- “The platform will be further scaled with debt of no more than 35% of gross asset value to achieve a 10-year average return on capital of 18% per year, excluding capital appreciation of equity holdings” .
To list in NGX: Agboola noted that the shares will be listed in NGX, while a 15% oversubscription cap will be absorbed.
Issuing houses include Kairos Capital, Emerging Africa, PAC Capital, Lead Capital and Mainstreet Capital.
- Agboola, commenting on the company’s half-year results, said: “Building on the momentum we achieved in 2021, we made significant progress during the first half of 2022 and reached several milestones as we broaden our customer reach and develop more properties. This was achieved despite a context of considerable geopolitical instability exacerbated by the conflict in Ukraine. This war has had a major influence on consumer spending, supply chains, headline inflation, the exchange rate, and energy prices.
- We remain committed to providing solutions that meet the needs of our environment and a young and dynamic population. The goal is to diversify our revenue streams through our real estate and lifestyle development businesses. Our focus is on strengthening growth through technology and partnerships, as well as improving our capital base. We hope to continue making progress during the year.”
Financial highlights: Gross revenue of ₦4.7 billion, an increase of 157.5% (H1 2021: ₦1.8 billion). A key driver of gross profit growth was revenue from commercial properties under development (70.5% of gross profit), which grew 391.0% year-on-year to £3.3bn (H1 2021 : £676.1 million).
Other gross profit drivers include rental income (5.8% of gross profit) of ₦273.8m (H1 2021: 288.9m), a marginal decline of 5.2% as a result of concessions granted to tenants to help alleviate adverse economic conditions in the country. .
Tenant service revenue (7.2% of gross profit) grew significantly by 87.2% to ₦337.1 million from ₦180.1 million in H1 2021, driven by increased of diesel and electricity tariffs in 2022.
Total other income (16.6% of gross profit) grew by 14.0% to ₦779.8 from ₦684.1 million in the first half of 2021 due to higher impairment write-offs of ₦273 .8 million (first half of 2021: ₦147.2 million)
Net income grew by 57.1% to ₦984.6 million in H1 2022 (H1 2021: ₦626.8 million), primarily due to higher revenues from commercial properties under development. Cost of sales also increased significantly during the period specifically, cost of sales of commercial properties under development increased by 638.6% to ₦2.7 billion (1H 2021: ₦372.9 million) due to cost recognition associated with the sales of commercial property in addition to the increase in the cost of materials and the exchange rate. Overall, this resulted in a net revenue margin of 20.9% in the first half of 2022 compared to 34.3% in the first half of 2021.
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