Property service provider Broll to split from CBRE and focus on BEE
Property manager Broll has ended its four-year partnership with US-based CBRE Group to become a majority black-owned business.
The privately owned Broll, which turned 43 in 2018, is in talks to sell shares to an unnamed black-owned company.
Chair Jonathan Broll said it was time the company made an effort to improve transformation in SA. He said the decision to end the relationship with CBRE was amicable.
“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 said.
“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,” said Broll.
The company entered into an affiliate agreement with CBRE in 2014 to service the US organisation’s clients in regions where it had no presence: SA, 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,” said Malcolm Horne, Broll’s group CEO.
“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,” he said.
Both sets of negotiations ran concurrently but, by November 2018, Broll had decided to prioritise the BEE transaction to fast track its transformation to a black-owned business.
CBRE was to relinquish its right of first refusal by November 30 but chose not to do so.
“CBRE informed us at close of business on December 5 that it had decided not the relinquish these rights but rather to end the affiliation,” said 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,” he said.
“The CBRE deal is very different to what Broll was seeking. We were after a proper acquisition across our business, and the CBRE deal was only a JV of certain service lines with SA exclusions.”
Broll expects to conclude its BEE deal in early 2019.
Founded in 1975, Broll’s services include auctions and sales, facilities management, industrial, investment and office broking, property management, retail leasing and projects, research, shopping centre management and valuations.
Broll employs 2,487 people and has offices in SA as well as operations in Cameroon, Ghana, Indian Ocean Islands, Ivory Coast, Kenya, Malawi, Mozambique, Namibia, Nigeria, Swaziland, Uganda and Zambia. It is the largest property manager in SA.
CBRE Group, which is based in Los Angeles, is the world’s largest commercial real estate services company.
Updated: December 10 2018
This story was updated to include a comment by the group CEO Malcolm Horne