October 22, 2016

What’s Next for Mobil’s ₦47.6bn Investment Property Portfolio?

Dolapo Omidire

This week NIPCO Plc, an indigenous downstream oil and gas company, announced the acquisition of a 60% stake in Mobil Oil Nigeria Plc (MON) from ExxonMobil, in line with the divestment trend seen by a number of international oil companies (IOCs) operating in the country. Interestingly, MON has a portfolio of investment properties that was worth ₦47.6bn at the end of last year.

“What will happen to this portfolio of investment properties?”

The Chairman/Managing Director, ExxonMobil Upstream Companies in Nigeria, Nolan O’Neal explained that NIPCO’s acquisition includes the office building and other real estate in Lagos owned by Mobil Oil Nigeria but leased to Mobil Producing Nigeria. He went on to explain that they anticipate Mobil Producing Nigeria will continue to lease those properties consistent with current lease agreements.

The investment properties include the head office building and a recently renovated 52-unit residential complex called Mobil Court in Victoria Island as well as four residential properties on Olu Holloway and Bayo Kuku Road in Ikoyi.

Mobil HQ, Interior of Mobil Court Residential Unit and Mobil Court, Victoria Island - Lagos. Image Sources: Tillyard Nigeria and jeff-davidson.blogspot.com.ng
Mobil HQ, Interior of Mobil Court Unit and Mobil Court, Victoria Island – Lagos. Image Sources: Tillyard Nigeria and jeff-davidson.blogspot.com.ng

Rental income for these properties was ₦4.2bn in 2015 bringing rental yield to 8.8%. NOI for the same period was ₦2.8bn when direct and other operating expenses are considered. The value of these properties grew 32% from 2014 to 2015.

In the event that Mobil’s new owners are not interested in owning these real estate assets and there is assurance that Mobil Producing Nigeria will continue to lease them, a potentially compelling investment opportunity lies herein.

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