- LLR will acquire an initial 30% equity stake in Orbit for USD7.2m
- Has an option to increase its investment to 50% for USD7.6m
- LLR is mitigating its Go-to-Africa strategy with strategic partnerships with regional experience
Botswana Stock Exchange-listed real estate company, Letlole La Rona Limited (LLR), whose existing property portfolio comprises industrial, retail, residential and commercial office space, today received the green light from an overwhelming 95.67 percent of shareholders who voted to co-invest into a USD53.6 million (P684 million) logistics, warehouse and manufacturing facility in Nairobi, Kenya.
In terms of the co-investment agreement, LLR will acquire an initial 30 percent equity stake in Orbit Africa Logistics for USD7.2 million, with an option to increase its investment to 50 percent for a further USD7.6 million. LLR CEO, Kamogelo Mowaneng, commented: “We are very encouraged by our shareholders’ support and confidence as this is our first regional transaction. This is a landmark transaction that alters LLR’s strategic direction and paves the way for greater sustainability and shareholder value unlock.
“The transaction delivers on our growth strategy which involves expanding into the African region and will result in 6 percent of our portfolio being ex-Botswana, strong net asset value growth and an initial USD yield of 7 percent. I am very excited by the solid platform it provides for further similar transactions. “The transaction will see us earn US Dollar revenue from one of the leading and well-established manufacturers in Kenya, a country widely regarded as the gateway to East Africa. It will further improve the fundamentals of LLR, considering the 25-year lease term on a triple net basis, which means the tenant is responsible for property taxes, building insurance and maintenance.”
Mowaneng pointed out that the risk associated with LLR’s Go-to-Africa strategy has been largely mitigated through strategic partnerships with credible entities who have regional experience, including London-listed Grit Real Estate Investment Group (Grit), which is one of the largest property investors on the continent, as well as the International Finance Corporation (IFC), the investment arm of the World Bank, who is a debt investor in the Orbit facility to the extent of USD25 million. “The board is very cognizant of the risks of rolling out our ‘Go-to-Africa’ strategy and intends to form strategic partnerships with credible entities who have regional experience,” Mowaneng explained.
Orbit Africa Logistics owns a 29 243m2 logistics and warehouse facility (the Orbit facility) situated in a prime location in Nairobi, Kenya and was acquired by Grit on a risk-mitigated sale-and-leaseback basis from Orbit Products Africa Limited (OPAL) in March 2022 for USD53.6 million. The facility is located on Mombasa Road, the principal route south of Nairobi centre, serving the main industrial node, the port of Mombasa and the industrial town of Athi river. It is strategically located 11 kilometres south of the international airport and 9.6 kilometres from the Inland Container Depot.
Upgrades to the property as part of phase two of the acquisition are expected to create long lasting positive social, economic and environmental benefits for local communities. The property will additionally benefit from significant improvements to modern FMCG industry standards and achieving IFC EDGE building certification upon completion. This certification requires a 20 percent or more savings in energy, water and embodied energy in materials compared to conventional building practices.
OPAL has been operating in Kenya for the past 40 years and is one of the well-established and leading manufacturers of personal care and home care products in East Africa. The company’s primary clients include multinationals such as Colgate, Henkel, Reckitt Benckiser and Ecolab. LLR sees the undersupply of quality industrial sector assets across the African continent as a prevailing opportunity in the short- to medium-term.