Company Description :
- El Badr for Investments & Commercial Spaces (“EL Badr”) is a real estate developer specialized in constructing and operating commercial complexes
- Its flagship project is Arkan Plaza, which is located in the heart of Sheikh Zayed. It’s a mixed-use project comprising of commercial and office spaces with a total net-leasable-area of 29,609sqm
- In 2013, Egycap Investments Ltd, acquired majority stake of 68.8% of the company, with a vision of expanding the current complex
- In early 2016, the company acquired 3 adjacent land parcels with a total land area of 80,585sqm, increasing its gross built-up-area by 96,600sqm(1)
Deal Rationale :
- Capitalizing on Arkans’ strong brand name to expand the current complex into a mega complex
- An unique management with diversified skills to execute the expansion plan. The management team has expertise in mall development, mall management, and creating optimal tenant mix
- Debt free balance sheet which could get levered up for further developments
- Dollar linked long term revenue stream to hedge against soring inflation. Unlike residential leasing contracts, commercial lease is typically dollar linked with contract duration of 9 years
- Capitalizing on Arkans’ first mover advantage in Sheikh Zayed to reach high occupancy levels in short time
Value Creation :
- Institutionalizing the company from a family managed enterprise through setting up a robust corporate governance system, hiring experienced and diversified board of directors, and setting up a supervisory committee
- Provided financial enhancements through allocating all costs to different profit center to detect shortfalls and to better price each revenue stream
- Optimized the capital structure mix through leveraging the company in the development phase
- Implemented a cost saving strategy in the development of the new complex. Currently, the new complex is developed through an EPCM model supervised by the owners representative committee
Pre/ Post Deal (2013-2016) :
Revenue EGP 40mn 2.4x⇒ EGP 95mn
EBITDA EGP 25mn 2.6x⇒ EGP 64mn
EBITDA M 63% +500 bps ⇒ 68%
Occupancy 60% 1.6x⇒ 100%
Land Area* 16,753sqm 6.4x⇒ 97,338sqm