Investors again fail to take up NSSF tender for 62-storey complex

National Social Security Fund (NSSF) will have to hold the construction of its 62-storied building in Nairobi after investors snubbed an invite to participate in the project.

This is the second time that investors have shunned the Sh20 billion project forcing the NSSF board to go to start weighing its options afresh.

“The invite was considered non-responsive because we got only one proposal and we needed a minimum of three to ensure competitiveness,” said NSSF managing trustee Richard Langat.

NSSF invited investors to partner with in the construction of the building which would host conference halls, a five star hotel and rental apartments last year.

But the fund confirmed it received proposals for the Sh80 billion Mavoko project that it was evaluating.

As per its annual report NSSF had set aside Sh2.8 billion for the conceptualisation of the two projects and laying ground works. Under the joint venture, NSSF was to contribute land to the projects with the other investors putting in cash for construction works.

The land on Kenyatta Avenue was valued at Sh2.8 billion last year while the 960-acre land in Mavoko was valued at Sh3 billion.

READ: NSSF seeks to revive two controversial real estate projects

Mr Langat said the fund was still packaging some of its buildings into real estate investment trusts (Reits). The fund has forwarded its proposal, which was approved by the board, to the industry regulator Retirement Benefits Authority.

It plans to offer Bruce House and the NSSF complex blocks A, B, C plus the parking silo, all in Nairobi, and the Social Security House in Mombasa to investors through the units.

Investment Reits allow investors to share in the rental income earned from the property while opening an exit path for the initial owners.

READ: NSSF packages its buildings for listing at Nairobi exchange

NSSF has in the past disclosed intentions to exit View Park Towers and Hazina Centre through sales but it has not been successful due to a lack of offers that matched its valuation.

Mr Langat disclosed investors in the Tassia project had started visiting the fund to make arrangements on how to pay Sh920,000 demanded from each of them by NSSF for infrastructure development at the Eastlands estate.

Forty-nine owners were said to have fully paid the amount while others had made commitments on how to clear the amount.

NSSF needs to reduce its investment in real estate in order to comply with statutory requirements that cap property holdings at 30 per cent.

READ: NSSF complies with real estate statutory limits

Apart from real estate the fund has also heavily invested in equities with a portfolio valued at more than Sh50 billion. The management said the fund was currently reaping capital gains on counters that have been on a rally.

The fund has become an active trader in the market following appointment of fund managers to oversee its portfolio.

NSSF has been working on increasing its efficiency so as to increase payout to members as it pushes to retain new business expected to come in with the enactment of the new law.

The fund has let go over 300 employees through a voluntary early retirement package opened last year. NSSF management said it had reduced the ratio of its expenses to total assets to three per cent as at end of June this year.

It is banking on implementation of the new contribution rates to further cut the ratio and become compliant to the 1.5 per cent cap set in the Act.