Grit Real Estate Income Group is set to sell its 50 per cent stake in Naivasha’s Buffalo Mall.
The Mauricio firm will sell the stake at more than Sh. 0.5 billion barely two years after acquiring it at Sh. 459 million.
With the stake valued at Sh. 530 million, the firm which is also listed on the London Stock Exchange (LSE) will walk out with a profit of Sh. 71 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,” says a report in a local daily.
The sale comes as demand for shopping mall space plummets in Kenya. It also comes after what the company termed as challenging retail trading conditions in the country.
The demand for space in shopping malls has fallen following and overflow of shopping malls that has left the market with more supply than demand, and left companies such as Deacons in the red due to low mall traffic.
The mall reduced rents for its tenants, partly contributing to the property’s $2.7 million (Sh. 275 million) loss in the seven months to January 2018.
“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 local mortgage lender HF Group, which is currently owed Sh. 448 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.