By Yinka Kolawole

The Lagos State government retains 35 percent equity holding in the concession agreement to redesign and redevelop the Falomo Shopping Centre in addition to the payment of N50 million which was meant for expression of interest only, the concessionaire, Afriland Properties Plc, has said.   Managing Director/CEO of the firm, Mrs Uzo Oshogwe, made the disclosure in a statement, last week, in response to the widely reported revocation of the concession agreement by the State Governor, Mr. Akinwunmi Ambode.

Ambode

Oshogwe however refuted claims that the state government was short-changed in the deal, noting that the transaction was done transparently and in accordance with best practice. It also denied the claim that only N50 million was paid for the lease, noting that the money was just for expression of interest. The statement reads: “The management of Afriland Properties Plc notes with concern, recent reports relating to its transaction to redesign and redevelop the iconic Falomo Shopping Centre in Lagos.

These unverified reports have implied that, the contract with the Lagos State Development and Property Corporation (LSDPC) was terminated on the grounds that the concession terms are  “grossly detrimental”  to Lagos State and its residents.    The reports also claimed that Afriland Properties only made a payment of N50 million for a 50-year lease of the government-owned land.

“Though the authenticity of these reports is unconfirmed, Afriland strongly refutes the suggestion that it has engaged in any misconduct or that the transaction is in any way detrimental to the people and government of Lagos State. We are strongly committed to creating a world class project, which will act as an economic magnet for central Lagos, creating opportunities for Lagosians and which crucially has been structured to ensure ongoing value will accrue to Lagos State and to Lagosians. The contract was negotiated transparently and in accordance with best practice.

“Afriland Properties and LSDPC, acting on behalf of the Lagos State government, established a Special Purpose Vehicle (SPV) which is jointly owned by the parties for the specific purpose of developing the Falomo project. Under the terms of the agreement, the SPV – Falomo Shopping Centre Development Company Ltd  –  was granted a concession to, amongst other things, develop, build, operate and maintain the Project on a Build, Operate and Transfer (BOT) basis.

Afriland paid N50 million to LSDPC as an expression of interest in the redevelopment project. The LSPDC will receive a 35 percent interest in the SPV for its land contribution and through this significant Equity Holding, will continue to receive significant ongoing value. Afriland is obliged to fund the entirety of the development costs which is projected to exceed N30 billion without recourse to the Nigerian taxpayer.”

A renowned property developer, who pleaded anonymity, said the transaction was fair since the state government will continue to earn 35 percent of the income generated by the project for the duration of the concession. “The project of about N30 billion, with 35 percent equity in the partnership, for 50 years, the value of that land would be about N3 to N4 billion.

A plot in Ikoyi is between N300 to 400 million, this implies that for the N50 million given to Lagos State plus 35 percent equity seems fair owing to the fact that the property before now was not generating any significant revenue,” he stated. Afriland further stated that it has consistently adhered to the terms of its agreement with LSDPC, as outlined in the Memorandum of Understanding (MoU) and Joint Venture Agreement that were signed and executed by the parties.