Mauritius-based Grit Real Estate Income Group is set to sell its 50 per cent stake in Naivasha’s Buffalo Mall in a transaction valued at more than half a billion shillings.
The London Stock Exchange-listed firm acquired the stake from Buffalo Mall Naivasha in April 2016 for $4.5 million (Sh459 million).
The Mauritius group currently values its stake in the shopping complex at $5.2 million (Sh530 million), indicating a minimum gain of at least Sh71 million. The firm could however sell its stake either at a premium or at a discount on its book value depending on market demand for the property.
“Several opportunities to increase net asset value growth are currently being extracted from the portfolio. These include the sale of our interest in Buffalo Mall in Naivasha, Kenya,” Grit told its investors in its 2018 year-end note.
The divestiture will leave Grit with its Sh2.2 billion warehouse in Nairobi, which it acquired from and leased back to pharmaceutical distributor Imperial Health Sciences, as its only property in Kenya.
Buffallo Mall was financed by HF Group, which is owed $4.4 million (Sh448 million).
Retail chain Tuskys is the anchor tenant at the 6,121 square-metres mall which has 37 other commercial renters and is fully occupied. Grit’s exit comes after what the company termed as challenging retail trading conditions in the country.
The mall reduced rents for its tenants, partly contributing to the property’s $2.7 million (Sh275 million) loss in the seven months to January 2018.
Increased investment in malls in Kenya has led to intense competition for tenants who are benefiting from lower rents and other favourable lease terms.