PROPERTY NEWS

ALMOST two years after WEMABOD Estates Development Company - the real estate holding firm for Odu’a Investment Company Limited - entered into a Memorandum of Understanding (MoU) with United States of America-based development company, PRI, the deal appears to be falling apart, stalling hopes of a turn-around in the fortunes of the indigenous property firm.

The deal, estimated at N35b, was to involve some properties owned by WEMABOD, including Gateway City land and Development House in Apapa, Lagos.

Specifically, properties to be re-developed were grouped into two. Properties listed under Group A are Development House on Broad Street, property situated at 13c Park Lane and another at Gateway City.

The second group included a proposal to demolish and build a Class A mixed-use building on the land where Unity House, Lagos currently occupies. It was also agreed to demolish property situated at 208/212 Broad Street, 52/54 Murtala Muhammed Way, Ebute-Metta and 21 Warehouse Road with a view to putting up new structures.

Concerning the property at 56 Marina, WEMABOD is contemplating the options of either settling with Lagos State on one hand and reaching an agreement to develop the property, or to trade settlement for another equally prime property.

Other properties owned and managed by WEMABOD, which have been penciled for future consideration according to sources, are Western House, LAPAL House and probably, Odu’a House.

"While two of the properties are residential, one of them is a new construction on vacant land, one is new construction on occupied land and one is an industry-bonded warehouse and office complex cum residential," a source said.

Mainly, the drive was to add value to the indigenous firm’s existing and ageing properties with a view to increasing the profitability of the company ahead of plans to eventually head for the capital market.

Details of the MoU include provisions that the development will entail concept creation, design, demolition, construction, reconstruction, renovation, repositioning, marketing, letting, sale or similar activities.

However, implementation of the MoU has not been without problems, as in the first instance, the MoU had specified a 24-month plan for the job.

WEMABOD agreed to provide the foreign firm or its designated entity with a right of first refusal on the development of any property that the indigenous firm controls or manages.

Each of the properties was to be held and developed by a Special Purpose Vehicle Project Company to have been formed to hold and develop the said property.

But shortly after the signing of the MoU, a disagreement arose between the parties. While it was learnt that the foreign firm may resort to court for intervention, the indigenous property firm said they could not go on due to inability of both of them to work out the execution modalities.

Speaking at WEMABOD’s AGM in Lagos last week, the Chairman, Chief Dosu Fatokun, said the intended development drive with PRI had to be done away with following a disagreement between them.

According to him, both parties could not agree on the modalities for execution of the signed agreement.

"EMABOD and PRI could not agree on the modalities to execute the signed agreement and therefore, WEMABOD thinks it is better to part at that level than going on and complicating issues."

Meanwhile, reviewing the firm’s performance in the past year, Fatokun said, "Despite the harsh economic environment, WEMABOD Estates Limited, a subsidiary of Odu’a Investment Company Limited, achieved a gross income of N519.29 million and an operating profit before tax of N139 million for the year 2009.

To position the company as key player in the industry, Fatokun tasked the shareholders to inject fresh funds into its operations to enable it compete effectively in the property market.

Group Managing Director of Odu’a Investment Company, Mr. Adebayo Jimoh, expressed satisfaction with the 2009 financial results.

Speaking through Odu’a’s New Business Development Manager Mr. Biodun Adedeji, Jimoh commended the on-going restructuring exercise at WEMABOD Estates Limited and the management’s decision to clean up its balance sheet.