Mauritius-based Grit Real Estate Income Group Limited has lined up Sh31.38billion($232million), including a Sh4.05billion ($ 30 million) investment by the International Finance Corporation (IFC), for the acquisition and development of industrial warehouse assets in Kenya, Mauritius, and Nigeria.
The private sector lending arm of the World Bank Group said in a disclosure that it will invest in Bora Africa, a wholly owned subsidiary of the Mauritius-based Grit that will separately contribute Sh25.97billion($192million) towards the acquisition and development of new storage assets across sub-Sahara Africa.
Grit is seeking IFC’s funding to support the acquisition and development of the industrial pipeline assets in Kenya, Mauritius, and Nigeria (the “pipeline assets”). The balance of the financing required for the pipeline assets will be provided by Grit and co-investors in the form of equity and by private financial institutions in the form of senior debt” IFC said.
“Grit sees significant opportunities in the industrial real estate sub-sector and is creating a REIT-like vehicle, Bora Africa, which will invest in warehousing, prime logistics, light industrial, manufacturing, storage facilities, data centres, and digital infrastructure real estate assets in Sub Saharan Africa” it added.
In the development plan, Grit will contribute its existing industrial portfolio of assets currently worth Sh12.44billion ($92 million) including Imperial Warehouse in Kenya currently occupied by Imperial Health Sciences, a healthcare supply chain management firm with operations in sub-Sahara Africa, and a warehouse leased by Orbit Chemicals Limited in Nairobi.
Grit’s assets also include a warehouse in Mozambique leased to global logistics company Bolloré and three land bank assets in prime industrial nodes in Kenya that are ready for greenfield development.
Warehouses demand
Demand for warehouses continues to increase in Kenya and the region as the number of companies either setting bases or expanding operations keeps growing.
Companies lease space for non-core activities like storage. Developers are diversifying into industrial property because they are cheaper to construct as they also move away from the increasingly tight commercial and luxury space segments.
Growth in e-commerce has particularly fueled the demand for warehouses as companies use warehouses to store their merchandise and run their operations online because orders are placed online and deliveries are done through courier services. Previously, warehouses were only popular with manufacturers and importers.
In the latest shift, developers have also been pushed to move away from the congested traditional go-down-based logistics hubs with easy access to transport routes.
Investors are now targeting Grade A warehouses that have modern features to drive profit margin improvements and allow users to scale up while reducing proportionate operational expenditure.
Several manufacturers and agricultural firms have already taken up Grade A warehousing spaces in Kenya. For instance, Twiga Foods has its operations domiciled in Grade A warehouse facilities.
As a technology-driven business-to-business marketplace for food and food products, Twiga relies heavily on effective storage to bring its vendors and customers together.
Analysts hold that while a godown in an industrial area might have a cheaper price per square foot, modern warehouses allow for significantly higher stacking that reduces the storage cost per unit of product.
Grade A warehouses also come with natural lighting solutions that cut back energy costs for tenants. BY DAILY NATION