SSNIT clarifies sale of 25% stake in Grand Regency Hotel, reports no loss

The Social Security and National Insurance Trust (SSNIT) has refuted claims that it incurred a loss in the sale of its 25% stake in the Grand Regency Hotel, previously known as the Kumasi Catering Guesthouse.

The Trust’s Director General, Mr. Kofi Osafo Maafo, addressed the issue during a press briefing in Accra, emphasizing that the sale was profitable and conducted with transparency.

Mr. Maafo explained that the valuation of SSNIT’s stake was independently conducted by the Ghana Institute of Surveyors, setting the value at GH₵6.684 million. The stake was subsequently sold to Rock City Hotel for GH₵7.4 million, resulting in a gain for SSNIT.

“We made a gain in that sale,” Mr. Maafo stated, addressing allegations that SSNIT had lost value in the negotiations. “It was not an internal valuation by SSNIT; it was done independently. Towards the end of 2021, the valuation for our 25% stake was GH₵6.684 million, and we sold it for GH₵7.4 million. This implies there was a gain of approximately GH₵0.716 million on the sale when compared to the valuation.”

Mr. Maafo also commented on the nature of negotiations, explaining that initial asking prices in negotiations are typically higher, with the final sale price landing at a mutually acceptable figure. “In any negotiation, you start from a higher figure and aim to reach an acceptable final price. That’s exactly what we did, and it resulted in a profit,” he elaborated.

He assured stakeholders that the sale process was transparent and conducted in the best interest of the Trust. “I presume if most of you are selling your houses or your cars, you wouldn’t start with a low figure. You begin with a higher figure and negotiate to an acceptable price. We applied the same principle and achieved a gain on the sale,” Mr. Maafo concluded.

The press briefing was held to address concerns surrounding the sale of SSNIT’s 60% stake in some six hotels.

Justification for SSNIT’s sale of 60% stake in each of its six hotels

La Palm Hotel

The Director General disclosed that La Palm had made losses in 11 out of the past 14 years.  According to him, “the hotel hasn’t been profitable, has not paid us any dividend and again, they are struggling.  Average return is -4.2% in the period preceding the decision to divest our 60% stake.

Elmina Beach Resort  

The situation of Elmina, is not different. The facility had made losses in nine out of the last 14 years,  had paid SSNIT no dividend, the investment put in had failed to earn the Trust any return. The average Return on Equity for Elmina Beach Resort is -4.8% for the period 2010 to 2017.

Busua Beach Resort

 The Director General reported that no dividends had been received, rather losses had been recorded in most of the years, and returns negative. The average Return on Equity for Busua Beach Resort was -31.7% for the period 2010 to 2017.

Ridge Royal Hotel

The predication of Ridge Royal Hotel is similar to the other hotels. No profits had been reported, rather it had made losses in nine years of its operation. “The average Return on Equity for Ridge Royal Hotel was -33.1% for the period 2016 and 2017 and has had a negative shareholders equity position since,” Mr Osafo-Maafo said.

 He revealed that “the hotel owes us GH₵44 million in the investment that we put into the hotel. And none of that has been serviced.  So again, just put that into perspective.

 Labadi Beach Hotel

The hotel had made losses in two out of the last 14 years , had paid dividends in the last two years, but the returns had been low.

According to the Director General, the average Return on Investment for Labadi Beach Hotel was 1.7% (2012-2017), averaging 5.2% for the period 2012 and 2022.