Tuskys woes cut ICEA real estate unit earnings in half

ICEA Lion-managed Fahari Real Estate Investment Trust (REIT) has seen its half-year profit to June 2021 halved to Ksh.42.2 million from Ksh.86 million previously.

The more than 51 per cent earnings deceleration for the trust is largely tied to the loss of revenues from its anchor tenant Tuskys at Greenspan Mall during the period under review.

The REIT total revenue booked in the period for instance fell by 19 per cent to Ksh.135.2 million from Ksh.166.9 million as a factor of un-remitted rent fees by its former anchor tenant.

At the same time, Fahari’s interest income declined by 10 per cent to Ksh.11.8 million on reduced cash available for investment.

Meanwhile, the REIT saw its property expenses rise by nine per cent to Ksh.52.8 million as a factor of withheld taxes by tenants on rent paid even as the units manager provided for Ksh.11.4 million in irrecoverable withholding tax.

ICEA has subsequently replaced Tuskys with Naivas as Greenspan Mall anchor tenant backing itself to see improved revenue collection from the property in the second half of 2021.

Subsequent to the earnings drop, ICEA has not recommended any interim distribution to unit holders for the opening six months of the year.

Fahari is however expected to distribute a minimum 80 per cent of earnings at the close of the 2021 financial year.

Earlier in April, the REIT paid out 60 cents per unit as its first and final distribution representing earnings made across 2020.

The Nairobi Securities Exchange (NSE) enlistee currently owns four properties including Greenspan Mall, an office building and two semi office and light industrial buildings, all valued at Ksh.3.5 billion.

The REIT has an additional Ksh.315 million in cash reserves taking its total assets under management (AUM) to Ksh.3.8 billion.