JKUAT to acquire ICEA building for Sh2 billion

The ICEA building along Kenyatta Avenue in this photo taken on February 28, 2015. The ownership of the building could soon change hands after the National Treasury approved its purchase by Jomo Kenyatta University of Agriculture and Technology (JKUAT) in a Sh1.85 billion deal. PHOTO | JENNIFER MUIRURI |   NATION MEDIA GROUP

In Summary

• Institution joins a host of others in buying prime city and urban properties
• JKUAT is looking for a permanent place within Nairobi to expand its programmes and accommodate its growing student population

By WALTER MENYA
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The ownership of the iconic ICEA building in Nairobi city centre could soon change hands after the National Treasury approved its purchase by Jomo Kenyatta University of Agriculture and Technology (JKUAT) in a Sh1.85 billion deal.

JKUAT is looking for a permanent place within Nairobi to expand its programmes and accommodate its growing student population. The 18-storey ICEA building is owned by the family of former Central Bank of Kenya Governor Philip Ndegwa. It stands on 0.674 acres of land along Kenyatta Avenue and has a gross lettable area of 163,788 square feet and 113 car park bays.

“The university has since received a Concurrence Letter from the National Treasury approving our application to borrow for the intended purchase of ICEA building. We presented to the National Treasury through our parent Ministry (Education) documents in support of our application to borrow (a loan) for the intended purchase of ICEA, including our business plans, and being satisfied with same, went ahead and issued their approval,” the Vice Chancellor, Prof Mabel Imbuga, told Sunday Nation.

SEEKING SH2 BILLION LOAN

The university is now seeking a loan of Sh2 billion from a commercial bank.

Sources familiar with the deal had earlier indicated to the Sunday Nation that there were allegations the price had been inflated. But JKUAT has denied any such adjustment of the cost.

The original offer from Knight Frank Ltd, acting on behalf of ICEA, was Sh2 billion. However, Prof Imbuga said the university has since negotiated the purchase price downwards to Sh1.85 billion.

“The balance from the amount to be borrowed (Sh2 billion) will go into paying transactional costs, which include stamp duty, VAT as well other professional costs,” she said.

APPROVED PROCUREMENT

JKUAT, she added, followed the provisions of the Public Procurement and Disposal Act 2005 and the purchase was approved by the University Council and the tender committee. Minutes of the tender committee of May 9, 2014, which Sunday Nation has obtained show that the tender committee had approved direct procurement of the building as per the Public Procurement and Disposal Act 2005.

The university has in the past purchased land in Mombasa CBD and another 250 acres of land along Thika Road for its expansion.

“These two properties are earmarked for expansion and development of the university and will go a long way in providing much-needed infrastructure following the rapid growth in student population in JKUAT, and the implementation of the university’s strategic plan,” Prof Imbuga said, adding that proposed development of the two properties will be done under the public private partnership.

JKUAT has been leasing Ansh Plaza on Biashara Street and Pension Plaza for its city Nairobi CBD campus at a combined cost of Sh26.4 million per year. The lease for Ansh Plaza has since expired and the university was looking for an alternative location for its city programmes before settling on the ICEA building.

At full occupancy, ICEA could generate Sh129 million in annual rent at current rates. Some of its current tenants are the National Bank of Kenya, Computer Pride Ltd, Acacia Medical Centre Ltd, Hamilton, Harrison and Matthews Advocates, Kenstrel Capital, AAR Health Services Ltd, Kobil Petroleum, Safaricom base station, Standard Investment Bank and ICEA Lion Insurance company.

GROWING DEMAND

The Juja-based University joins a list of public and private universities that have been purchasing buildings in Nairobi and other major urban centres in response to the growing demand for higher education.

Kenyatta University had, for instance, purchased Comcraft House, which has since been renamed KU Plaza along Nairobi’s Haile Selassie Avenue. On the city’s Moi Avenue, the former Trust Towers was renamed MKU Towers after being bought by Mount Kenya University.

Other buildings targeted by universities in the CBD include Posta Sacco House (Kenya Methodist University), Stanbank House (being used by the Muguku family as a college), Church House (St Paul’s University), and Ambank House (University of Nairobi Pension Scheme).

Last year, MKU also purchased the 14-storey Union Towers in central Nairobi, for Sh800 million from former President Mwai Kibaki for its Virtual Learning Centre.