This project is a good opportunity for institutional investors
to participate in the fast growing hospitality market in Nigeria.
The Proposed Transaction
Re-development of LASACO House, a 17 floor commercial office block
situated in the center of the financial district of Lagos, into a 4-star
84 room business hotel.
A Special Project Vehicle shall be incorporated which will be jointly
owned by the initiators and new investors in the project.
The initiating company Transatlantic Brunel Invesco Limited (TBI)
already has an “agreement in principle” with LASACO Assurance
Plc i.e. the owners of LASACO House on getting a renewable 25 years
lease for the building.
Reasons to Invest into the Nigerian Hospitality Market
There are many reasons to invest into the hospitality industry in Nigeria,
Africa's most populous nation, with Lagos being the largest city in Africa.
Nigeria is one of the most dynamic countries in the
According to Goldman Sachs, Nigeria will be one of the world’s
largest economies by 2030.
The World Bank has identified
Nigeria as one of the 11 countries that will be global economic
of growth over the next 2 decades.
Citibank estimates that Nigeria
will be the fastest growing economy in the world until 2050,
with average growth rates of more than 8% over the next 4 decades.
Nigeria is better than its reputation. High ranking officials in
government and regulatory bodies are successfully implementing anti-corruption
After several general elections that have been free and fair, the
democratic system is well established in Nigeria.
On the other hand, political uncertainty is still a risk factor.
However, the militant islamistic sect of Boko Haram which has entered
the headlines in the news quite often is only active in the North
East region of the country, and clashes between Muslims and Christians
are restricted to specific areas in the geographic center of Nigeria.
In the Southern part of Nigeria the negative effects are negligible.
The CBD of Lagos Island
Travel and tourism is still an underdeveloped but rapidly growing
sector of the Nigerian economy. With the Nigerian economy growing
at about 7% annually for the past decade, the potential for growth
in the hospitality business is huge and still remains largely untapped.
It will continue to be attractive to new investors and hotel operating
companies for many years to come.
According to W Hospitality Group Data, there are over 40,000
hotel rooms being planned or under construction, that is in the pipeline,
for between year 2013 and year 2017, for the African continent. The
top city for the planned construction is Lagos which has 4080 rooms
in development. Recent developments in the Lagos hospitality industry
for 2013 include the recent opening of the 358-room Intercontinental
in Victoria Island, Lagos, as well as the recent announcement by Transnational
Corporation of Nigeria to develop a Transcorp Hilton, at Ikoyi, Lagos.
complete absence of any good quality hotel in the Lagos CBD represents
an excellent value proposition for Lasaco Hotel.
The prime location
of LASACO House is a competitive advantage to other 4* and 5* hotels
in Lagos. The intended room rates will be
compared to other hotels.
Lagos, the commercial capital of Nigeria is also the hub
of West African commerce and the financial and manufacturing center of
The population of Lagos will exceed 25 million people
by 2015, and it is by far the largest city in Africa. Lagos accounts
of the GDP of the Nigerian economy. The economy of Lagos will be the
13th biggest economy in Africa by 2014, equivalent to the size of the
entire economy of Ghana and it is estimated that over 70% of the companies
driving the Nigerian economy’s success are based in Lagos where
the bulk of their customers also reside.
The city can be conveniently
divided into the residential, commercial, and mixed-use districts.
The premier commercial district is the Lagos
Central Business District (Lagos CBD) and it is virtually synonymous
with the geographic area called Lagos Island.
LASACO House is situated
in the heart of the financial cluster of the Lagos CBD, and a brisk walk
reveals that the headquarters of some
of the most significant players in the financial sector of Nigeria’s
economy are nearby, e.g. First City Monument Bank, Union Bank, First
Bank, Wema Bank, Mainstreet Bank, the United Bank for Africa (UBA), the
Bank of Industry, the Nigerian Stock Exchange Building and the newly
completed Lagos Office of the Central Bank of Nigeria. Other significant
neighbors are the Shell Petroleum Development Company, United African
Company, and the Nigerian Port Authority.
The project development will be done by Transatlantic Brunel Invesco
The CEO of this company is Dolapo Ajayi, a high-end real estate
developer from Lagos and very much an insider in this business landscape.
In this short video, Dolapo Ajayi presents the Lasaco Hotel project
and comments on other opportunities in the property development sector
in Lagos. The video clip is extracted from the documentary film
DramaConsult by Dorothee
Wenner that will be shown in Germany's broadcast channel Arte
on February 21st, 2014, and subsequently on ZDF
DramaConsult is currently screening in German cinemas and available
The execution of the project will cost Naira 3.355 billion (US$20.710
million). Equity capital will amount to N1.0 billion (US$6.173 million)
while debt capital will be N2.355 billion (US$14.537 million).
Investments from the initiators amount to N0.5 billion (US$3.1
This proposal assumes that the SPV will borrow in US dollars
from the international money markets with a moratorium period of
24 months. The loan shall be paid off in four years
beginning from the first year of operation.
The construction phase is estimated to last for two years.
The operational phase starts in the third year after financing (=
Year I in the graph left).
The hotel is estimated
to start generating a positive cash flow and profit from the first
year of operations.