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Firm to invest Sh12bn in Kenyan real estate

Xterra joins a growing list of funds buying Kenyan properties in the office and retail space. PHOTO | FILE
Xterra joins a growing list of funds buying Kenyan properties in the office and retail space. PHOTO | FILE 

Mauritian real estate fund Xterra Capital Advisors has identified Kenyan properties worth close to Sh12 billion in which it will invest the proceeds from its on-going fundraising.

The property fund says it will invest $114 million (Sh11.6 billion) in a 90,000 square metres high-end mixed-use development in Nairobi County.

Xterra Capital chief executive Wagane Diouf said he could not give finer details of the properties to avoid jeopardising the deals in the pipeline.
“We cannot give the names of the properties due to competition,” said Mr Diouf.

The Nairobi-based property will be completed in 2018.

Xterra Capital plans to raise $300 million (Sh30.2 billion) in equity and a similar amount in debt making a total of Sh61.4 billion, majority (34 per cent) of which will go to Kenya’s property market.

The rest of the funds will be invested in Rwanda, South Africa, Nigeria, Ghana and Uganda.

Fund raising will go on for the next three months after the investment firm got regulatory approval from the Stock Exchange of Mauritius and subsequently appointed a transaction advisor.

“We have appointed African Alliance Investment Bank as the placing agent,” added Mr Diouf.

The fund will invest 78 per cent of the proceeds in greenfield developments, 13 per cent in brownfield projects while the remaining nine per cent will go towards buildings that are already generating rental income.

Construction of the greenfield projects is expected to begin by the end of this month.

“Greenfield are developments that are breaking ground within six months of fund closing. Brownfield developments are ongoing and will be completed within 12 months of closing,” said a summary of the project.

Property consultants have in the past said there is still growing demand for Grade A offices and high quality malls despite the expected glut in office and retail properties.

MML (formerly Mentor Management Ltd) chief executive James Hoddell says the biggest demand is coming from multinational tenants.

“MML is seeing an increase in the presence of serious international investors (many from South Africa) which is leading to ever-keener pricing of grade A commercial investments,” said Mr Hoddell.

Xterra joins the list of funds buying Kenyan properties in the office and retail space.

South Africa’s Delta Africa Property Holdings reached an agreement to buy a 45.5 per cent stake in Naivasha-based Buffalo Mall for Sh418 million in November.

Stanlib Investment’s debut Income-Real Estate Investment Trust (Reit) that raised Sh3.6 billion through a public offer will buy Greenspan Mall for Sh2 billion.

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