ICEA eyes real estate unit restructure after loss

ICEA Lion Asset Management awaits requisite regulatory approvals to restructure its real estate unit trust known as Fahari-i-Reit after a total earnings wipe-out in 2021.

The unit returned a loss of Ksh.124 million from a profit of Ksh.148 million in 2020 on the back of an 18.2 per cent fall in revenues to Ksh.265.7 million.

“We have embarked on a process to review the REIT with a view of ensuring that we are able to address its optimal performance,” noted ICEA Lion Asset Management Limited CEO Einstein Kihanda.

The REIT’s rental income fell by 12.8 per cent to Ksh.297.5 million as its prime Greenspan Mall property stayed without an anchor tenant for the better part of the year.

“We had seven months of loss in income with regard to the anchor tenant. We started earning rent on the property in August of 2021,” added Mr. Kihanda.

Naivas replaced Tuskys as Greenspan anchor tenant with the departing retailer leaving behind arrears of Ksh.26 million which the REIT has provisioned for.

Further, the REIT took Ksh.22.8 million in new provisions for irrecoverable withholding tax alongside fair value losses on the valuation of properties.

At the same time, the new anchor tenant at Greenspan Mall took up a smaller space than the predecessor but aligned with the REIT manager’s goal of cutting its concentration risks.

The REIT is the proprietor of three other properties including 67 Gitanga Place, a grade A low rise office block and Bay Holdings, a commercial property in Industrial Area both of which have a 100 per cent rate of occupancy.

Fahari I-Reit is also the proprietor of Signature International, a second commercial property in Industrial Area’s Pokomo Road which is yet to post any occupancy.

The REIT is expected to distribute Ksh.102 million in earnings to unit holders in line with real estate investment trust rules.

The impending review of the REIT will likely yield in the restructure of property holdings.

“Ultimately these are decisions requiring approval even as we have a view on where we want to be with regards to the performance of each property,” noted Mr. Kihanda.