Ilam Fahari I-Reit (formerly Stanlib Fahari) has issued a profit warning for the year ended December 31, 2021.
In a statement, Ilam Fahari I-Reit said that the expected lower than prior year earnings are mainly attributable to the revaluation losses recorded by the REIT properties against the backdrop of the Covid-19 pandemic whose impact continues to be a material valuation uncertainty in the short to medium term.
“The REIT Manager, together with the Trustee of the Ilam Fahari I-Reit wishes to inform the Unitholders of the REIT, potential investors and the general public that, based on the preliminary assessment of its projected unaudited financial results for the year ended December 31, 2021, net earnings will be at least 25 percent lower than that reported in the comparative year ended December 31, 2020,” the company said.
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In addition, there was a loss of revenue from the anchor tenant at Greenspan Mall for a period of seven months during the year under review.
As of September 2020, collapsed retail giant Tuskys was the anchor tenant at the Greenspan Mall, and had rent arrears amounting to over Ksh30 million by the time of closure.
The Reit Manager on-boarded Naivas Limited as the replacement anchor tenant with rental income accruing from August 2021. The REIT Manager expects that, once Naivas opens their store in early 2022 and with continued relaxation of Covid-19 restrictions, the footfall at the mall will increase, resulting in better performance.
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Ilam Fahari I-Reit recorded Ksh148 million in profit after tax for the year ended December 31, 2020, compared to Ksh175.2 million in 2019, marking a 16 percent decline from the previous year. The performance translates to distributable earnings of 74 cents per unit to Unit Holders, compared to 80 cents per unit in December 2019.
The decrease was mainly attributable to a reduction in fair value gain on revaluation of investment property compared to the previous year. This led to three assets returning a capital depreciation as of December 31, 2020.
The fund is managed by ICEA Lion Asset Management after it acquired its rival Stanlib Kenya.
ICEA, owned by the Philip Ndegwa family, took over Stanlib’s operations including the management of Fahari, in May 2020.
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