The brothers are part of the larger Chandaria industrialist family that includes businessman Manu Chandaria.
Grit has signed an agreement to take a Sh2.7 billion loan from the International Finance Corporation (IFC) to fund the venture.
Brothers Sachin Chandaria and Dhiren Chandaria are set to pocket Sh1.7 billion from the sale of their Orbit Products Africa Limited (Opal) manufacturing and warehousing facilities in Mlolongo to Mauritius-based property firm Grit Real Estate Income Group.
The brothers are part of the larger Chandaria industrialist family that includes businessman Manu Chandaria.
The multinational will spend an additional Sh967 million to expand the facilities of Opal, which is the contract manufacturer for global firms such as Reckitt Benckiser, Colgate-Palmolive and Unilever at the 20-acre site.
Grit has signed an agreement to take a Sh2.7 billion loan from the International Finance Corporation (IFC) to fund the venture, disclosing additional details of the investment and Opal’s owners.
This is the initial investment in the project, which is expected to cost Grit a total of Sh5.8 billion later on when it injects additional capital from other debt sources.
“Opal, controlled by the Chandaria family, has operated in Kenya for more than 40 years and is the leading manufacturer of popular personal care and home care products for the East Africa region, employing over 600 permanent staff,” Grit said in a statement.
“$16.1 million (Sh1.7 billion) of the loan will be utilised to fund the purchase consideration and associated transaction costs related to the initial sale and leaseback.”
The Mauritius-based property investor first announced in October 2019 that it had signed an agreement with Opal to buy its 20 acres of land in Mlolongo, Machakos, which houses its factory.
The deal was to be completed last year but had delayed due to economic uncertainty brought by the Covid-19 pandemic. The transaction is now targeted to completed this month.
“The transaction is underpinned by strong corporate guarantees from the parent companies of the Chandaria family, with which Grit has further credit risk insurance policies that provide for up to three years of rental obligation guarantees and cover,” Grit said.
The IFC noted that Grit would only own the structures and land and will rent back the same in the same condition to the same tenant to continue the existing operations.
The property developer will not have any role in the production operations of the tenant.
“A further redevelopment and expansion of the existing facility will be undertaken from the second quarter of 2022, with expected completion in the fourth quarter of 2023, when it will be let on a new 20-year triple net lease at an attractive contractual development yield of 16 percent (net of acquisition costs), enhancing the rental income on the expanded asset and its capital value,” Grit said.
The acquisition will add to Grit’s property portfolio in Kenya.
Grit owns half of Naivasha Buffalo Mall and also holds a pharmaceutical warehouse along Mombasa Road that it leases out to South Africa’s Imperial Health Sciences Logistics.
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