Fineline | Feb 23,2019
A landmark property in the busiest neighbourhood of Addis Abeba has received an offer that was over three times the threshold auction price of 237 million Br.
A Chinese industrialist, East Steel Plc, has offered 810 million Br to acquire Edna Mall, a prime property under Tekleberhan Ambaye Construction Plc (TACON). Located on Cameroon Street, across the Bole Medhanialem Cathedral, the property has been held as collateral against a loan TACON took from the state-owned Commercial Bank of Ethiopia (CBE).
The seven-storey complex lays on a 2,000sqm plot and began operation in November 2008. It houses restaurants, shops, offices, an arcade, and underground parking garages. But it is more popular for its cinema halls, attracting thousands of visits daily. Edna Mall is a flagship property under Tekleberhan Ambaye, a construction mogul with other properties in the city.
Last week's auction is the latest piece of bad news for TACON, which has been in a sort of free fall over the past couple of years. Recently, the contractor had a 1.2 billion Br project terminated by the Federal Building Construction Project Office. The 16-storey building project off General Wingate St., in the Arat Kilo neighbourhood, has since been handed over to the state-owned Ethiopian Construction Works Corporation to serve as the Ministry of Trade & Industry headquarters upon completion.
The auction last week drew five bidders, including Mulugeta Mekonnen, a businessman who imports heavy-duty construction equipment and exports agricultural products. He offered an amount that is 10 million Br lower than East Steel. Held on July 7, 2021, the auction required bidders to submit 25pc of the threshold price as bid security.
Another businessman, Desalegn Fente, has offered 750 million Br, while Commercial Nominees Plc, a 45-year-old firm engaged in property management and administration services, offered 700 million Br. Though present during the auction, representatives of the United Bank did not submit any offers.
United Bank was interested in bidding for the property to use it as a branch office and rent out the remaining space. But offers made at the auction were much higher than bidders had anticipated.
"We didn't expect anything over 400 million Br," said Tulu Deressa, result management director at United Bank.
His bank netted 894 million Br in net profit in 2019/20, 84 million Br higher than the offer East Steel made for Edna Mall.
Founded in 2012, East Steel operates in the Eastern Industry Zone in Dukem, 35Km southeast of the capital. Having an annual production capacity of 1.3 million tonnes of steel, the plant supplies rebar to the construction industry.
"We had hoped we could offer between 600 and 700 million Br at most," Yu Jun, CEO of East Steel, told Fortune.
Wubshet Abera, a property management and marketing expert who once served Edna Mall as a deputy marketing manager, has witnessed offers much lower than his expectations.
"I had expected an offer of one billion Birr," he said, attributing his bullishness to the mall's prime location and profitability.
Managers of Edna Mall were not available for comment despite repeated attempts. However, the management of the CBE declined to comment, claiming confidentiality.
PUBLISHED ON Jul 11,2021 [ VOL 22 , NO 1106]
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