Mauritius-based Grit Real Estate Income Group is acquiring manufacturing facilities from consumer goods manufacturer Orbit Products Africa in a cash transaction valued at more than Sh4 billion.
Grit signed an agreement last week with the contract manufacturer of global firms such as Reckitt Benckiser, Colgate-Palmolive and Unilever to buy its 20 acres of land in Mlolongo which houses its factory.
The acquisition, expected to be completed by March next year, will add to Grit’s property portfolio in Kenya.
Mauritius-based Grit Real Estate Income Group is acquiring manufacturing facilities from consumer goods manufacturer Orbit Products Africa in a cash transaction valued at more than Sh4 billion.
Grit signed an agreement last week with the contract manufacturer of global firms such as Reckitt Benckiser, Colgate-Palmolive and Unilever to buy its 20 acres of land in Mlolongo which houses its factory.
The acquisition, expected to be completed by March next year, 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.
In the new deal, Orbit will sell the land and buildings to Grit and remain as a tenant that will pay rent besides all the other property expenses, including taxes, maintenance and insurance.
“The Orbit acquisition will provide Grit’s shareholders with further diversification into a single tenanted, light industrial real estate asset in a key market in East Africa with the backing of a 25-year, triple net, hard currency denominated lease,” Grit said in a trading update.
“East Africa focused light industrial and logistics opportunities will form a significant focus for the group in the short to medium term, as Grit looks to bolster its exposure to this asset class and region.”
Grit says it could take between 80 percent 100 percent ownership of the assets, with Orbit having an option of remaining a minority partner.
BUYING BACK
Assuming Orbit sells out completely, Grit will pay $32.2 million (Sh3.3 billion) for the land and manufacturing facilities.
The amount excludes other transactions costs like value added tax (VAT).
The property investor will also provide an additional $8 million (Sh824 million) that will be used to construct additional premises that will also be leased out to Orbit.
The rent to be paid by Orbit is expected to amount to a net yield of between 9.2 percent and 11.1 percent.
Grit will charge Orbit rental fees of up to Sh820 per square metre per month.
If Orbit sells the entire property to Grit, it will still have an option of buying back a 20 percent interest in the assets at a cost of Sh9.2 billion in 11 years.
Orbit, which was originally established as a family business, has been in existence since 1977 and is one of the largest manufacturers in East Africa.
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