Garam auctioneers pink advertisements on Monday newspapers elicit little attention assumed to carry struggling nobodies properties on auction.
But when they carried Tiara Villas, the Sh384 million luxury apartments belonging to Peter and Susan Muraya (Suraya) on the hammer for a loan, then the contagion of bad real estate investment had crept up from the anonymity of nobodies to the men who run this town.
Over the last few weeks Investment firm Britam Holdings has been pulling all the machinations to keep sale of its properties as quiet as possible.
The investment firm approached agents putting up several properties for sale for a lucrative cut of 3 per cent the value of the properties.
According to an offer letter, Britam wants to cash out Sh6.5 billion offsetting prime property it has held in its books for years.
Britam centre, the office park in Upper Hill is up for sale at a reserve price of Sh2.4 billion and Olive Garden in Hurlingham is expected to fetch Sh280 million.
The company is also selling 2.3 acres in Upper Hill for Sh600 million per acre and Sh11 million for each of the 172 acres in Lukenya along Mombasa Road.
Britam is also selling 25 acres in Mlolongo for a reserve price of Sh46 million per acre and 21 acres in Ngong town for a reserve price of Sh1 billion.
By exiting some of its major real estate investment in a shock move the Britam may have hit property prices if read as a fire sale stocking panic of wider industry problems.
The overall trend is that no one is willing to pay current valuations but too many firms holding property are unable to reflect reality in their asking prices.
“I have heard in the last few days that banks and insurers had decided late last year to start moving fixed assets off balance sheets rather than take the risk of writing down land and property values,” says an expert who spoke to this desk.
He said the broader economic weakness is feeding through the real estate which was always highly overvalued and overdeveloped.
Britam Director Marketing and Corporate Affairs Muthoga Ngera said they are not selling land en masse claiming the reports was part of a malicious attack on the Investment company.
“We are not selling land, what has happened, there are some properties one or two. You remember we had this matter of Cytonn and the other guys, there were properties that were bought that we thought we needed to release the capital. It is not many, just some properties somewhere at Lukenya and a property here at Upper Hill,” he said.
However a real estate agent who we made inquiries to as buyers cited the property on Rose Garden as one of the properties they had been instructed to sell.
We also posed as buyers inquiring after the Mlolongo and Ngong properties calling Britam front office where a lady asked us to send bid documents via email.
She said there was no closing date, the reserve prices was negotiable.
“Its negotiable and open ended and people have gone there and seen where the properties are. Have you gone there and seen where the properties are?” she asked.
“There’s someone who deals directly with them am not sure the guy is in the office now. But you just do this send your proposals to that email then they will get back to your directly on phone. Makes sure you indicate your contact,” she said.
Mr Muthoga denied the statement saying this was an attempt to scandalize the company following the release of dismal results.
“Why would we want to sell Britam Centre? In fact what we have even done, we had offices in Renaissance we are closing that down and bring the Britam General Insurance from there to Britam Centre, why would we want to bring them there and then we sell,” he said.
“If we wanted to sell property like that we would put it on the paper. How would Britam be broke when we are a one billion company the results were just paper losses and most of the financials had paper losses,” he said.
The investment firm Britam Holdings posted a Sh2.2 billion loss in 2018, down from a profit of Sh527 million in 2017 blamed the decline on a 10 per cent occupancy of Britam towers and decline in performance at the NSE.
Britam Group Managing Director Benson Wairegi also said the 2018 performance is largely attributable to the poor performance in the stock market.
The group reported unrealised loss from investment in listed equities of Sh3.2 billion compared to a gain of Sh0.9 billion recorded in 2017.
The firm’s costs were also pushed up by reorganising staff after 110 workers left the company under the voluntary early retirement. “This saw Britam pay them Sh600 million in the one-off costs,” noted Wairegi.
By exiting the real estate portfolio, the Company may be reallocating their assets to safety after it spent Sh1.4 billion for a stake in Gulf Energy through New York based Everstrong Capital.