ADB Not Sold

Management of the Agricultural Development Bank (ADB) yesterday presented a varied picture from what has been put out in the public domain about a purported sale of its headquarters in Accra.

It followed reports that the state-owned development and commercial bank had sold its headquarters (ADB House) located along the Independence Avenue for $10 million and rented an entirely new office space at the Accra Financial Centre (AFC), about a mile or so away from the bank’s old head office building, for GH¢1 million per month.

At a well-attended press conference in Accra yesterday, Managing Director of ADB, Steven Kpordzie, and his team took time to parry the various allegations.

The ADB House served as corporate head office but only housed about 40% of total staff and departments of the head office.

When the issue about the sale of the head office building came up, he narrated that two things came to mind; renovate and rent out or sell and convert into cash and fund liquidity.

He explained, ‘We have some of our head office departments operating from Dankwa Circle which is a rented office from Citizen Kofi; some operate from Ring Road Central, also from a rented property; we have others also operating from Nima, which is also a rented property from the Catholic Church; some were operating from Achimota, also a rented property and the rest were operating from Cedi House, a rented property.’

According to Mr Steven Kpordzie, ‘In anticipation of our going to the Stock Exchange, it was important for us to do a proper physical branding; physical branding also means that we align our processes to facilitate workload and so people can also have shared platforms and so it was necessary to bring all the head office departments together.’

Head office sale
To make those decisions, he said they needed to make valuations and that ‘the valuations that were done gave us two results; the rental option suggested that the Bank was going to make GH¢3.5 million per annum.’

He revealed that before selling the property, there was an open tender which was published in the newspapers to which they had responsive bids, with the two highest bidders – a Ghanaian company and another foreign company – offering to buy it for $10 million.

That, Steven Kpordzie said, would have been after they had spent money to renovate the property since ‘in its current shape, the toilet facilities are not in any good shape at all, including the electrical wiring; we’ve had two near misses of fire outbreaks.’

Aside that, he hinted that ‘The structure of the building itself is prohibitive, and we don’t have sufficient parking space in there.’

For this reason, the managing director said, ‘If you want to remodel that building, there is going to be a challenge. The valuation for an outright sale returns the figure of GH¢17.7 million.’

‘If you want to do rental, you’re going to spend far more than another GH¢6-7 million to be able to realise GH¢3.5 million per annum,’ he posited.

In view of that, the ADB boss noted, ‘The Board took the decision that the property should be sold for the proceeds to fund growth; the proceeds were never intended to be used to pay rent wherever we went.

‘It was converting a non-earning fixed asset into cash and therefore creating liquidity to fund growth.’

Regarding the fact that it is a freehold property, Mr Kpordzie said, ‘The Board took the decision that the property be sold to a Ghanaian.’

Even that, he said, had since not yielded results because ‘as I speak to you today, that transaction failed and because the transaction failed, I can confirm to you that the ADB House is not sold and we have not re-engaged,’ thereby parrying suggestions the building has been sold.

Justification
Even though a banking institution, Kpordzie said ADB did not have the needed money, for which reason they could not develop a new property.

They therefore resolved to use a 1.4-acre land on which the Accra Financial Centre currently sits which then served as a transport yard for the Bank and parking lot to visitors.

According to him, ‘The Board decided that it was important for us to look at how we take a non-earning asset and create value out of it…management then looked at all options and said if it was appropriate for us then we should find a way to build a corporate head office that will befit the status of the future bank that we wanted to create because we don’t have capital.’

Since the Bank did not have the needed resources, he indicated that two options came to mind: ‘We need to either go borrow to come and build, which did not make business sense, or find a partner who will help us develop this property’

That, he said, was when Westport Properties, a real estate development fund from South Africa, came in.

Partnership Deal
They then went into a partnership to develop the new head office building which has come to be known as the Accra Financial Centre.

According to the MD, ‘ADB’s contribution in the project is just the value of the land, which is valued at just $2.4 million at the time of the project; that was in 2012.’ That he said gave ADB a share holding of 5.6%.

‘But we told the developer, our partner that given that the idea of developing a corporate head office was conceived by ADB, we needed goodwill recognition and so through negotiations, rather than the 5.6%, we ended up with a minimum 10% share holding with the provision that if after construction, the cost comes down, ADB’s share in the special purpose vehicle will go about 15%,’ making ADB an anchor tenant.

The Bank occupies approximately 7,250 square meters out of the 10,000 square meters of space at an amount of $37.00 per square meter, including fittings and furnishings.

‘We didn’t have to spend one pesewa on anything to move into this head office building; the only thing that we spent money on was a new Data Centre…’ he insisted, thereby justifying management and the Board’s decision to opt for the new head office.

By Charles Takyi-Boadu