London listed Grit Real Estate Income Group Limited (“Grit” or “the Group”), a leading and award-winning pan-African impact real estate company focused on investing in, developing and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro denominated long-term leases with high quality multi-national tenants, mid-May broke ground on a new 10,721m2 A-grade warehouse facility for Orbit Products Africa Limited (“OPAL”).
OPAL, controlled by Sachen Chandaria and his family, has operated in Kenya for close to 50 years and is the leading pan-regional contract manufacturer of dominant brands in personal care and home care products across the East and Southern Africa, employing over 600 permanent staff. OPAL’s primary clients include global multi-nationals and leading regional FMCG players, such as Reckitt Benckiser, Unilever, Colgate and Henkel as key customers.
The new warehouse development follows Grit’s US$37.7 million acquisition of the 29,243m² OPAL facility on a sale and leaseback basis in March 2022.
“The new warehouse development and upgrades to the existing facility will significantly increase OPAL’s manufacturing capability to international standards, improving on capacity and turn-around times. It will further allow for product and category extensions, to better service and support the ambitious growth plans of our pan-regional and multi-national customers,” commentedSachen Chandaria, Executive Director of OPAL.
Donald Borthwick, Grit’s managing director Industrial structure and Kenya commented:
“The Orbit facility upgrades are expected to create long lasting positive social, economic, and environmental benefits for local communities and help to further strengthen the broader precinct as a prime logistics and supply chain hub, whilst the property will additionally benefit from being significantly improved to modern FMCG industry standards. Our goal in this regard is to achieve an IFC EDGE green building certification on completion.
“The expansion and the refurbishment of the Orbit facility further underscores our commitment to creating long-term value for all our stakeholders, including tenants, shareholders, and the communities in which we operate.”
An innovation of IFC, EDGE (Excellence in Design for Greater Efficiencies) helps property developers to build and brand green in a fast, easy and affordable way. The EDGE standard sets a minimum 20% reduction in energy consumption, water usage and embodied energy in materials compared to conventional building methods
Environmental and social impacts include the encapsulation of roofing in line with NEMA guidelines. It is further expected that because of the increased manufacturing capacity post the upgrades, factory and middle-management headcount will expand by between 20% and 25%, resulting in approximately 100 jobs being added.
Grit expects that approximately 150 job opportunities will be created during the construction phase of the additional 10,721m2 warehouse space.
The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometres south of the international airport and 9.6 kilometres from the Inland Container Depot.
The site is well known to Grit, being less than one kilometre from the Imperial Health Sciences logistics facility owned by Grit, and the Grit Urban Logistics industrial site on which the company intends to commence development soon.
“Grit sees significant opportunities in the industrial real estate sub-sector and has created 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 (SSA),” Mr Borthwick added.
“The OPAL facility and new warehouse, alongside Imperial Warehouse, three land bank assets in Kenya ready for greenfield development, as well as our Bollore Warehouse in Mozambique will form the cornerstone assets of Bora Africa,” he said.
Bora Africa will then raise additional financing to execute an approximate US$192 million pipeline of acquisitions and new asset development opportunities in sub-Sahara Africa.
Financing to support the acquisition and development of the industrial pipeline assets in Kenya, Mauritius and Nigeria is being negotiated with the International Finance Corporation with the balance of the financing required for the pipeline assets to be provided by Grit and co-investors in the form of equity and by private financial institutions in the form of senior debt.