Mauritius-based Grit Real Estate Income Group has revised the price at which it will buy the remaining 50 percent stake in Naivasha’s Buffalo Mall to $2.2 million (Sh308.5 million).
The company had earlier disclosed it would spend $2 million (Sh275 million) to take full ownership of the property.
The multinational says in a new trading update that the buyout will cost more.
“Grit intends acquiring, subject to necessary approvals being obtained, an additional 50 percent interest in Buffalo Mall Naivasha Limited … that will result in Grit’s interest increasing to 100 percent for a value of $2,244,222 (Sh308.5 million),” Grit said.
“Once Grit takes full control and ownership of the retail complex, it will be free to deploy the full extent of its asset management and leasing capabilities with a view to repositioning the mall and the adjacent owned 37,280 square metres vacant land that has been earmarked for value-enhancing initiatives.”
Grit noted that the higher transaction price still represents a discount of about 15 percent to the latest independent appraised value of the mall.
The mall made a loss of $399,000 (Sh54.8 million) in the six months to December 2022, the disclosures show, having recorded revenue of $149,000 (Sh20.4 million).
Grit acquired its first 50 percent stake in the mall in April 2016 for $4.5 million (Sh618.7 million at current exchange rates) but the subsequent years of ownership have coincided with tough operating conditions for retail space owners in the country due to increased competition as more developers put up similar facilities.
The Covid-19 pandemic also hit demand for retail space, both on account of reduced spending power among consumers and the sharp adoption of online purchases by Kenyans who were shielded physically from the pandemic.
Other than the mall, the Mauritian firm has been deepening its position in Kenya’s real estate sector with direct and indirect investments in manufacturing facilities, warehouses and a diplomatic housing estate.
Grit recently broke ground on 10,721 square metres grade A warehouse facility for Orbit Products Africa Limited (OPAL).
The new A-grade warehouse follows Grit’s Sh5.16 billion acquisition of the existing 29,243 square metres OPAL facility on a sale and leaseback basis in March 2022.
“The new warehouse development and upgrades to the existing facility will significantly increase OPAL’s manufacturing capability to international standards, improving on capacity and turn-around times,” commented Sachen Chandaria, the Executive Director of OPAL.
“It will further allow for product and category extensions, to better service and support the ambitious growth plans of our pan-regional and multi-national customers.”
