Stanlib set to list Sh3bn property fund on the NSE

Asset manager Stanlib Kenya has set aside a Sh3 billion war chest for acquiring property that will be converted into a Real Estate Investment Trust (REIT) for listing at the stock market.

Stanlib which is owned by South Africa’s Johannesburg Stock Exchange-listed Liberty Holdings, is set to launch the property fund that will be used to acquire commercial and residential buildings for rental income.

The REIT will be listed at the Nairobi Securities Exchange (NSE).

Stanlib’s parent firm, Liberty, disclosed the fund’s details in a briefing session with investment analysts.

The fund, awaiting approvals from Capital Markets Authority (CMA) and Kenya Revenue Authority (KRA), is expected to be unveiled by end of March.

It will be run as an income Real Estate Investment Trust (REIT) that will earn rent besides accumulating capital gains from the portfolio of properties.

Stanlib has already done due diligence on a number of targeted properties, according to people familiar with the REIT dubbed Fahari Income.

READ: Reits best real estate bet for low income earners

It will focus mainly on commercial properties but will also invest in residential units. Stanlib which has Sh183 billion under management, pools funds from Liberty’s insurance operations and third-party investors including retirement funds and high-net-worth individuals.

Johannesburg-based Liberty owns Liberty Kenya Holdings, which in turn owns Heritage Insurance and Liberty Life Assurance Kenya. The multinational said it has already set aside $5 million (Sh455 million) as seed capital, with the balance to be raised from investors.

The initial fund size will be Sh1 billion but will grow up to Sh3 billion over the next two to three years.

The REIT will make it easier for institutions and individuals to get a piece of the booming property market by breaking the units of ownership into shares allotted to the participating investors.

Listing the REIT on the stock market will provide investors with an easy exit route by offering liquidity similar to those of quoted equities. Stanlib will earn fees for acquiring and managing the properties on which investors will earn steady annual dividends from rent collections.

While the REIT will focus on generating rental income, investors are also expected to get distributions arising from capital gains in occasional property sales.

Rapid urbanisation, economic and population growth are the key drivers of demand in Kenya’s lucrative property market.

A report by Hass Consult found that real estate outperformed bonds and equities in the decade ended 2010 in terms of income and capital appreciation.