Grit Real Estate in Kenyan financing deal with International Finance Corporation
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LONDON-listed Grit Real Estate Income Group, which has about 60 percent of its shareholders in South Africa, said yesterday that it had issued a bond to raise up to $31.5 million (R472.3m) to acquire, expand and redevelop the Orbit Africa warehousing and manufacturing facility in Nairobi, Kenya, on a sale and leaseback basis.
Grit is a pan-African real estate company that invests in and manages a portfolio of assets in carefully selected African countries. The bond was raised from Ethos Mezzanine Partners and BluePeak Private Capital.
The total purchase consideration of $53.6m would be settled by way of $25m in senior debt finance negotiated with the International Finance Corporation and $28.6m through the perpetual note issuance, Grit said in a statement yesterday.
Grit planned to invest the additional proceeds of the bond issue into the St Helene Private Hospital in Mauritius, which had been identified as a growth opportunity.
Grit chief executive Bronwyn Knight said in a statement the Orbit sale and leaseback transaction and facilities upgrade was indicative of the reliable, and attractive opportunities with robust prospects for long-term profitable growth that Grit was exploring on the continent.
“It meets all Grit's investment criteria including an attractive yield, net asset value accretive from inception, located in a prime position and in a high-growth sector with exceptional counterparties,” she said.
She said they were excited to start the longterm relationship with IFC on the strength of “a robust and well-established east African tenant covenant and an accretive investment and redevelopment project that will not only be accretive to shareholders but also create long-lasting positive social, economic, and environmental benefits for local communities.”
“The structure of the transaction is in line with our strategy to co-invest alongside development funding institutions, enhancing our balance sheet and delivering on our sustainability goals,” she said.
IFC Manager for Real Estate, Hotel & Retail & Education and Manufacturing Investments in Africa Olaf Schmidt said the IFC's loan, to be specifically used to finance the acquisition of the Orbit Africa facility, would help to develop vital manufacturing infrastructure in Kenya.
“It is important for IFC that its financing will strengthen the involvement of Grit, a successful pan-African player specialised in attracting financing from international markets by using efficient and internationally-proven business models for the development and improvement of industrial and logistics properties,” he said.
The Orbit facility is less than 1km from Grit's Imperial Health Sciences logistics facility, and the Grit Urban Logistics industrial site on which the company intends to commence development in the near future.
The facility will be leased back to Orbit Products Africa Limited on a new 25-year US dollar denominated triple net lease, with an option to extend the lease term for a further 10 years.