Grit Real Estate Income Group, a Mauritius-based property firm has confirmed the planned acquisition of Orbit Products Africa Limited (Opal) – a manufacturing and warehousing operation controlled by brothers Sachin Chandaria and Dhiren Chandaria for Ksh1.7 billion.
The transaction is expected to be completed in August 2021. The purchase of Opal by Grit was first mooted in October 2019 and an agreement signed, although the effects of the Covid-19 p******c r meant that the transaction was put on hold.
Opal serves as a contract manufacturer for global firms in the home care and personal goods space, including Colgate-Palmolive, Unilever and Reckitt Benkiser. Sachin and Dhiren form part of the larger Chandaria family which includes famed industrialist Manu Chandaria.
Grit’s portfolio in Kenya already includes half of Naivasha’s Buffalo Mall, and a pharmaceutical warehouse along Mombasa Road leased out to South Africa’s Imperial Health Sciences Logistics. Their latest acquisition, Opal, is a 20-acre industrial property in Mlolongo, along Mombasa Road.
“Opal, controlled by the Chandaria family, has operated in Kenya for more than 40 years and is the leading manufacturer of popular personal care and home care products for the East Africa region, employing over 600 permanent staff,” Grit highlighted in a statement.
The Mauritian firm signed an agreement with the International Finance Centre (IFC) to provide a Ksh2.7 billion loan to fund an initial investment into the venture, which Grit plans on expanding significantly. In total, the real estate group plans on spending Ksh5.8 billion on the operation including injecting additional capital from other debt sources.
“$16.1 million (Sh1.7 billion) of the loan will be utilised to fund the purchase consideration and associated transaction costs related to the initial sale and leaseback,” the statement confirmed.
As part of the deal, Grit will own the structures and the 20-acre land Opal sits on, but will rent back the same in the same condition to the same tenant to continue the existing operations.
“The transaction is underpinned by strong corporate guarantees from the parent companies of the Chandaria family, with which Grit has further credit risk insurance policies that provide for up to three years of rental obligation guarantees and cover,” the firm noted.
Grit will have no role in the production operations of the tenant. The firm is eyeing big business once the re-development is complete.
“A further redevelopment and expansion of the existing facility will be undertaken from the second quarter of 2022, with expected completion in the fourth quarter of 2023, when it will be let on a new 20-year triple net lease at an attractive contractual development yield of 16 percent (net of acquisition costs), enhancing the rental income on the expanded asset and its capital value,” Grit disclosed to shareholders.