LAPTRUST Imara I-REIT has issued a profit warning, signaling a significant drop in its core income base. The real estate investment trust (REIT) forecasts a decline of at least 25% in earnings for the year ending December 31, 2025, mainly due to weakened rental revenue. This marks a stark contrast to the previous year, during which the REIT saw impressive growth in rental income.
In 2024, LAPTRUST Imara I-REIT reported a 57% increase in rental and related income, reaching KSh 479.1 million compared to KSh 305.2 million in 2023. Additionally, other operating income rose by 46%, reaching KSh 100.7 million, bringing total operating income to KSh 579.8 million. Despite these gains, the REIT posted a headline loss due to non-cash valuation adjustments, primarily driven by a steep fair value loss on its investment properties.
Challenges Faced by LAPTRUST Imara I-REIT
Operating expenses surged sharply to KSh 296.6 million, up from KSh 176.4 million the previous year. The increase was mainly driven by a doubling of fund operating expenses to KSh 151.4 million and higher utility costs of KSh 80.0 million. However, the REIT still managed to increase its operating profit by 29%, reaching KSh 283.1 million, highlighting the strong rental performance in 2024.
Despite the growth in operating profit, the REIT recorded a significant loss attributable to unit holders of KSh 204.3 million in 2024, compared to a profit of KSh 57.2 million in 2023. The earnings per unit swung to a loss of KSh 0.59 from a profit of KSh 0.17.
Profit Warning Linked to Rental Income Weakness
The latest profit warning is tied directly to a weakening in rental income, which is the foundation of LAPTRUST Imara I-REIT’s operating profit, distributable income, and future payouts. Unlike the previous year’s loss, which was driven almost entirely by non-cash valuation movements, the 2025 warning reflects a more concerning trend of reduced rental revenue.
While the profit warning did not specify which properties or segments are contributing to the revenue decline, further details regarding occupancy levels, tenant turnover, and lease expirations will be crucial in understanding whether the slowdown is temporary or part of a longer-term trend.
About LAPTRUST Imara I-REIT
LAPTRUST Imara I-REIT is a closed-ended income REIT listed on the Restricted Sub-Segment of the Nairobi Securities Exchange. When it listed in March 2023, the REIT issued approximately 346.2 million units at KSh 20 each, resulting in an initial valuation of roughly KSh 6.9 billion. The units were structured as restricted, with the sponsor committing to hold the entire issuance for an initial lock-in period, after which trading is limited to eligible investors.
The REIT’s performance in the coming year will depend heavily on its ability to address the rental income issues outlined in the warning. As more details emerge, investors will need to assess whether the challenges are temporary or indicative of a more sustained slowdown in the market.
