Fahari I-Reit is set to sell two buildings valued at Sh200.4 million. FILE PHOTO | SHUTTERSTOCK
Listed property fund ILAM Fahari I-Reit is set to sell two buildings valued at Sh200.4 million as part of its plans to sell non-core assets and restructure its operations.
The fund says that it has started the process of selling Highway House –a three-storey industrial building located off Mombasa Road in Nairobi.
The property is currently vacant after the expiry of the lease of the former tenant.
Fahari is also looking for a buyer of Bay Holdings, a building that is currently fully leased to Imperial Bank, Packard Limited and Architecture Supply Limited.
Read: Property fund Fahari awaits approval for restructuring
The property is located at the junction of Enterprise Road and Bamburi Road within Nairobi’s Industrial Area.
“Accordingly, the properties are presented as an asset held for sale,” Fahari says in its latest annual report.
“Efforts to sell the properties have started and a sale is expected by the end of the year ending 31 December 2023. Various offers relating to Highway House have also been received.”
Fahari acquired the two properties in 2016 at a total cost of Sh324.8 million, indicating that it will book a loss on the disposals before adjusting for rental income collected over the years.
Highway House was bought in June 2016 for Sh108.7 million while Bay Holdings was acquired in the same month at a cost of Sh216.1 million.
Fahari says the proposed operational restructuring of the Reit could lead to the delisting of the fund from the Nairobi Securities Exchange.
The strategic review, which started in 2021, saw Fahari fail to hold its annual general meeting last year. The Reit will now hold its AGM on April 24 when it will cover the financial statements and other items like dividends for the 2021 and 2022 financial years at once.
“The Reit manager (ICEA Lion Asset Management Limited) sought approval for the postponement of the AGM to accord more time to effect the proposed restructuring process that may lead to a material change in the listing status,” Fahari said.
Read: Fahari's real estate units get tax waiver
Listed real estate investment trusts are required to comply with various regulatory limits including holding at least 75 percent of their assets in properties and distributing a minimum of 80 percent of their earnings.
Fahari is currently compliant with all of the requirements.
The planned asset sales will leave the Reit with only two properties –Greenspan Mall in Donholm and an office building called 67 Gitanga Place in Lavington.
If the planned property disposals are concluded, the value of the fund’s investment properties will drop to Sh2.9 billion from Sh3.2 billion. On the other hand, its cash holdings will increase significantly.
Fahari has not yet initiated new property purchases but is currently considering developing part of the vacant land at Greenspan Mall.
→ emwenda@ke.nationmedia.com
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