Grit Real Estate, whose anchor shareholders include the Public Investment Corporation (PIC), has made available nearly R800m to acquire and expand a warehousing and manufacturing facility owned by a Kenyan consumer goods manufacturer, as part of a strategy to boost its exposure to light industrial assets.
The transaction is structured on a sale and leaseback basis, meaning Orbit Products Africa will sell and then lease back the facility from Grit over 25 years, with an option to extend it for another 10 years, the two companies said on Wednesday.
Grit has secured finance from the International Finance Corporation, a member of the World Bank group, as well as from Ethos Mezzanine Partners and BluePeak Private Capital.
“Kenya as a jurisdiction is for us a key country of focus; we see exceptional growth coming out of Kenya as a market. Being able to partner with a local operator who has such a strong local presence in Kenya, so the Orbit Group and Orbit family … is really a key and strategic partnership for us,” Grit CEO Bronwyn Knight said in a virtual press conference.
“So, from our perspective, what this signifies for Grit is the future strategy of light industrial and the ability to work with people across the African continent outside of SA to be able to enhance their operating model.”
Listed in London and Mauritius, Grit owns assets worth $849.2m (R12.6bn) in nine African countries including Mozambique, Mauritius and Zambia. Its portfolio is split across the office, retail, light industrial and hospitality sectors. Its tenants include mobile operator Vodacom and Absa Bank.
The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of the capital Nairobi and serves the main industrial node, the port of Mombasa and the industrial town of Athi River.
Orbit Products Africa executive director Sachen Chandaria said the deal would enable the business “to unlock a pool of capital that was previously inaccessible, but in a very smart, strategic and cost-effective way and ultimately allows us to get to a point where our balance sheet is substantially strengthened and positions us for growth”.
The companies said the facility upgrades, due for completion in the fourth quarter of 2023, will benefit surrounding communities and strengthen the broader precinct as a prime logistics and supply chain hub.
The deal by Grit and Orbit comes after several SA companies left a few jurisdictions on the continent, including Kenya, citing weak economic growth and difficulties in repatriating money.
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