Shoprite Holdings has paid Resilient Reit (real estate investment trust) a grand total of R1 for the 60.94% of three Nigerian malls owned under the Resilient Africa structure it didn’t already own.

Importantly, Shoprite no longer has any operations in the west African country, having divested its supermarkets in mid-2021. So this was a property-only deal resulting in Shoprite becoming a landlord in the country, even though it itself disposed of its retail interests in that market in 2021.

The portfolio of the three malls – originally owned by JSE-listed Resilient and comprising 30 000m2 – was part-owned by both Resilient and Shoprite.

In 2021, Resilient told the market it would dispose of its 60.94% interest in Asaba Mall, Delta Mall and Owerri Mall. At the time – right after the Covid-19 pandemic – it said an “in-principle agreement had been reached, however, the purchase consideration had not yet been agreed”.

At that point, of course, the naira had been relatively ‘stable’ against major currencies.

A steep devaluation, caused by the Nigerian government this year, has seen the naira lose more than 66% of its value.

So, of course, Resilient had kept ‘negotiating’ with Shoprite on these assets. And then, one assumes, came a point of no return.

Funny story. That ‘purchase consideration’ – an attempted sale of what had effectively become three stranded assets – was never agreed.

Fast-forward to March 2024, and Resilient has suddenly announced it will sell its 60.94% stake in the three malls to Shoprite for the princely sum of R1.

Resilient was on the hook for $45 million – nearly R900 million – all due in March 2024.

This loan was advanced to it by Shoprite on the sale of a portion of these assets back in 2021. As early as 2022, Resilient made it clear that “a purchaser has not been identified”. It had previously reclassified those assets as ‘for sale’ but decided to rather no longer hold this classification as at March last year.

Resilient’s share price

A year prior, Resilient stated that “all three malls in the portfolio are fully let”.

Literally last week, Resilient was on the hook for the $45 million of funding provided by Shoprite for the purchase of the stake in the three malls. It was due to repay this on March 3. Some would call it ‘vendor finance’.

It became clearer and clearer that Resilient would not be able to repay the $45 million in borrowings and that it needed to somehow get rid of this stake.

Resilient maintains that the nearly R1 billion in funding – in today’s money – was secured by the three malls in Nigeria, “with no recourse to Resilient’s South African balance sheet”.

After three years of hunting for an acquirer, Resilient seemingly finally threw in the towel. There aren’t many buyers of Nigerian shopping mall assets around.

Resilient, too, didn’t exactly have R1 billion to pay off that loan. At the end of December, the group had R64 million of cash in the bank. It only reported profit for the year of R3.345 billion.

And so, we arrived at a point where Shoprite Holdings couldn’t afford to not buy the 60.94% in these three malls that it didn’t already own.

After all, who else would buy it? It’s been on the market for three years already.

There simply aren’t too many buyers of African – especially West African – assets these days. Ask Hyprop

R1 may seem cheap on paper, but that R1 comes at the cost of $45 million. There are still real repayments that need to be made to lenders.

And what will Shoprite do with three random malls in Nigeria? Probably play the long game, as it always has. Thankfully, Shoprite Holdings has a far healthier balance sheet than most.

Shoprite’s share price