KENYA – Orbit Products Africa, a Kenyan consumer goods manufacturer, is selling its manufacturing facilities to Mauritius-based real estate investment company Grit Real Estate Income Group in a cash transaction valued at more than Sh4 billion (US$38.7m).
The contract manufacturer of global firms such as Uniliver Kenya, Bidco Oil Industries, Delmonte, New KCC among others, signed an agreement with Grit Real Estate to purchase its 20 acres of land in Mlolongo which houses its factory.
Orbit Products Africa intends to 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 acquisition is expected to be completed by March next year.
“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.
Assuming Orbit sells out completely, Grit will pay US$31.9million (Sh3.3 billion) for the land and manufacturing facilities, reports Business Daily.
The property investor will also provide an additional US$7.9 million (Sh824 million) that will be used to construct additional premises that will also be leased out to Orbit.
Grit will charge Orbit rental fees of up to Sh820 (US$7.9) per square metre per month.
The rent to be paid by Orbit is expected to amount to a net yield of between 9.2 percent and 11.1 percent.
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 (US$89m) in 11 years.
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.