Hardly a day after Broll Uganda, the Ugandan unit of South Africa’s Broll Property Group (Pty) Ltd had distanced itself from being part-owned by Pine Investments Ltd, a property development company, owned by the Attorney General Mr. William Byaruhanga; entertainment mogul, Charlie Lubega of Guvnor Night Club and Henry Lubwama, of HL Investments, it has emerged that it is instead a company, belonging to children of the tycoons that has acquired the 40 percent stake.
According to information available to this website, the company, Cedrus Investments Limited, recently acquired 925,480 shares in Broll Uganda, valued at UGX925,480,000. The other 1,387,220 shares, worth UGX1,387,220,000 are owned by Broll Property Group (Mauritius) Ltd.
Cedrus Investments on the other hand, is owned by 28-year old Mark Luswata Lubega, a son to Charlie Lubega, 26-year old Ivy Susan Kanyunyuzi, a daughter to William Byaruhanga and Juliana Wasswa Lubwama a daughter to Henry Lubwama. The trio each own 330 shares, while 10 shares of the company registered on 28th January 2019 are unalloted.
While there is nothing illegal with the three children who are adults, and possibly entrepreneurs in their own right, owning a property management firm, eyebrows have been raised as to why a global company like Broll, in search of strategic local partners would choose to relinquish 40 percent to a company that is barely one year old and owned by newbies, two of whom are under 30 years of age.
But the answer to this question could lie in the fact that as soon as Cedrus Investments acquired the shareholding in Broll Uganda, a property management agreement with Pine Investments, the owners of Rwenzori Properties- Rwenzori House, Rwenzori Towers and Rwenzori House in Nakasero was signed. The contract will run from September 1st, 2020, he said. The three Rwenzori properties, altogether consisting of some 16,000 sqm of lettable space were previously run by Knight Frank Uganda.
Again, industry analysts, this reporter spoke to, said that while this is not illegal, the obvious connection between Pine Investments, a property developer and Broll Uganda, that is supposed to be an independent property management company, presents an obvious conflict of interest.
“It defies key tenets of fairness, transparency, and acting in the client’s best interests,” said one property analyst, adding: “The independence of a property management firm which is owned 40% by a client becomes questionable. Conflict of interest issues could arise where the interests of shareholders’ properties compete with those of other non-shareholder clients.”
Judy Rugasira Kyanda, the Managing Director of Knight Frank and refused to comment about the transaction saying she is an interested party who still has a running contract on the Rwenzori Properties until the end of August.
Could have Pine Investments acquired a 40% in Broll Uganda through proxies?
We presented this conflict of interest issue to William Byaruhanga and his partners, Charlie Lubega and Henry Lubwama but the trio never responded to our inquiries, 18 hours after we had sent them. They also refused to comment on the possibility that the three shareholders in Cedrus, were merely proxies.
We also asked Dennis Lutalo the Managing Director of Broll, Uganda whether he thought being part owned by a company linked to a property development firm, which was now his major client, would disadvantage his other clients who also owned other competing properties, but he had not responded to our queries by the time of writing this story.
He also failed to respond to our queries, on whether he knew, at the time of signing Pine Investments properties, he knew that the company was linked to Cedrus and vice versa.
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When CEO East Africa Magazine asked him yesterday, if the acquiring company was connected to Pine Investments, he did not confirm or deny.
“I will share with you the entire story soon. I need authorization to disclose the local shareholder for now,” he said.
He also could not say whether the change in management of the Rwenzori Properties was linked to the changes in shareholding.
What impact will the Rwenzori Properties deal have on the balance of market power?
Broll which entered the Ugandan market in 2017 has made slow gains in a market largely controlled by Knight Frank, who has a lion’s share of the market. Knight Frank is believed to control approximately 70% of all commercial assets under management, including some signature properties like Acacia Mall, Village Mall and the under-development Arena Mall in Nsambya. This excludes owner-managed property development and management companies such as Crane Management Services and Property Services. The remaining market share is shared amongst Bageine & Company Ltd, who have been in the market for at least 30 years as well as Broll and other smaller companies.
Judy Rugasira Kyanda, in an interview with CEO East Africa Magazine, late last year, said her firm manages approximately 1,000,000 square metres of retail space, over 100 prime residential units, and, 500,000 square feet of office space.
Knight Frank started in 2000 primarily as an estate agency known as East African Property Agency Ltd, (EAPA) and later became a fully-fledged international property consultancy firm in November 2000 when Knight Frank acquired the business, rebranded and head-hunted Judy Rugasira Kyanda to head up the valuations department.
Judy would later work her way upwards to become the Managing Director and shareholder in 2005. Under her, Knight Frank Uganda has grown to become a market, leader from a company of just 12 staff, and a portfolio of 2 small commercial, and 4 residential properties. The company is now a fully-fledged organization with several property professionals offering asset management and facilities management; corporate real estate services, and property agency.
Knight Frank which stands out in the market for its specialised retail centre management unit headed by Marc Du Toit who possesses over 30 years of retail centre leasing and management experience in South Africa, Asia and America. The company also stands out for its valuation and advisory as well as research and consultancy, with a dedicated resource for specialized asset classes like Healthcare, and Education sectors).
Judy herself is a seasoned property professional with over 25 years’ experience in the property sectors of East Africa and the United Kingdom. She is a Chartered Valuation Surveyor and member of the Royal Institution of Chartered Surveyors, and is also Chair of the Surveyors Registration board serving for her second term.
Knight Frank Uganda which turns 20 this year and is part is majority-owned by Knight Frank UK (which celebrates its 120th anniversary this year, has been crucial in the development of the previously non-existent property management industry. Most, if not all of Broll Uganda’s senior executives, including Moses Dennis Lutalo, Wakoko Masaba Jimmy (Property Manager) Alan Muwanga, and Hughes Opio are all ex-Knight Frank people.
