Broll Property Group (Pty) Ltd announced this morning that it has ended its affiliate partnership with US-based CBRE Group, Inc. The move frees Broll to pursue its transformation goals and become a black majority owned business.
Jonathan Broll, Chairman of the Board at Broll, says the Group’s relationship with CBRE was mutually beneficial and the parting has been amicable on both sides. “As South African society changed, we realised we have a responsibility to ourselves, our shareholders and the public to conclude a BEE deal as soon as possible,” he explains. “After a protracted period of negotiations to be acquired by CBRE, it became apparent that an agreement satisfying this condition would not be reached. I believe that events have therefore unfolded to the advantage of all parties.”
Acquisition vs BEE
Broll entered into an affiliate agreement with CBRE in 2014 to service the American organisation’s clients in regions where it had no presence, namely South Africa, Nigeria, Ghana and the Indian Ocean Islands. In terms of the contract, CBRE had the right of first refusal to acquire Broll and expressed an interest in doing so.
“During this time, we committed ourselves in earnest to transformation and began seeking a suitable BEE partner capable of carrying the business forward with the aim of finalising a transaction by the end of 2018,” relays Malcolm Horne, Broll’s Group Chief Executive Officer. “We have engaged with a suitable party and are now free to conclude a transaction which should see Broll as a proudly South African majority black owned business with increased geographic reach and a substantial increase in size"
Both sets of negotiations ran concurrently but, by November 2018, Broll decided to prioritise the BEE transaction to fastrack its transformation to a black-owned business. It therefore formally requested CBRE to relinquish its right of first refusal by 30th November.
“CBRE informed us at close of business on 5th December that it had decided not the relinquish these rights but rather to end the affiliation,” says Horne. “While we were excited at the prospect of joining CBRE, we could not do so in good conscience at the cost of our BEE obligation as our South African business remains the heartbeat and major profit contributor to the group. We believe in transforming our economy and have taken the correct decision to prioritise this aspect of our business above all else.” With the agreement terminated, Broll is free to conclude its BEE deal and expects to announce details of the transaction in early 2019.
Horne affirms that, with 5 decades of growth, Broll is not a company to bet its fortunes on one contact. “We maintain a diversified portfolio of clients and services across 16 countries in Sub-Saharan Africa,” he says. “Our success is built on relationships, high performance and service excellence, and we continue to actively seek out new business opportunities.”
The Group’s Occupier Services division has its own substantial client base apart from CBRE. It recently renewed its biggest financial services client agreement for a 5 year period and concluded two additional multinational contracts. Yet, the division is just one of nine other business units, which include auctioneering, brokering, facilities management, property management, research, retail leasing and consultancy, storage, and valuation and advisory services. “Broll is a diverse property services company with entrenched local relationships continually expanding and remaining relevant to the market place,” says Horne. “But we will do so knowing we have first fulfilled our obligation to become a black owned business.”
Jonathan Broll agrees. “Broll is constantly broadening its reach across the continent,” he says. “We’re positive that this anticipated change will open doors to more business deals, job creation and the development of skills our country needs.”
Broll Property Group is confident that the same unstoppable purpose that has fueled its growth since 1975 will continue to serve its investor and occupier clients as the company steps progressively and boldly into the future.