Property fund ILAM Fahari I-Reit (NSE:FAHR) posted a flat net profit of Sh86 million in the six months ended June as higher costs offset revenue growth.
Earnings are largely unchanged from Sh86.2 million the year before despite rental and related income growing by 5.6 percent to Sh177.8 million on rent hikes. Interest income also jumped by 13.7 percent to Sh16.53 million from Sh14.54 million previously.
At the same time, Fahari marked a Sh1.6 million increase in the fair value of investment property, albeit a lower adjustment from Sh3.37 million previously.
The unit’s operating expenses, however, rose from 100.1 million to Sh109.9 million. “Property expenses increased by 12 percent compared to the same period last year mainly due to high operational costs resulting from the challenging economic environment. Electricity expenses, for instance, increased significantly by 42 percent,” ICEA Lion Asset Management, the manager of the property fund, said in a statement on Wednesday.
Fund operating expenses equally grew by eight percent to Sh55.98 million, which represented costs related to ongoing operational restructuring.
Fahari’s basic earnings per unit have remained at 48 cents after flat profits, which equals the distributable earnings per unit for the period.
The Reit manager has not recommended an interim distribution for the period but will make the payout to unit holders at the end of the financial year in December.
At the end of the six-month period under review, Fahari's total assets under management stood at Sh3.4 billion comprising investment property valued at Sh2.9 billion of which Sh200.4 million represented property assets held for sale.
Earlier this year, the listed property fund revealed plans to sell Highway House –a three-storey industrial building— as part of the disposal of non-core assets in the restructure of its operations.
Fahari has also been looking for a buyer for Bay Holdings, a building in Nairobi’s industrial area.
