NSSF holdings in real estate drop by Sh7bn

The value of the massive land and building holdings by the National Social Security Fund (NSSF) dropped by Sh7 billion in 2013 following the reclassification of two housing projects in Embakasi.

The audited financial statement for the 2013 financial year shows that NSSF’s land and buildings investments, both developed and under development, stood at Sh20.3 billion in 2013 compared to Sh27.2 billion in 2012.

The Retirement Benefits Authority prescribes a property component of not more than 30 per cent of the total portfolio that NSSF now appears to be edging closer to complying with after a huge climb in stocks value.

NSSF managing trustee Richard Lang’at said Wednesday that the fund has also made some outright cash sales on properties in the two estates since their completion.

“We reclassified the Nyayo Estate Phase Four and Phase Five in Embakasi from land and buildings on our investment portfolio to the tenant purchase scheme, hence the drop in the value,” said Mr Lang’at.

The tenant purchase scheme value on the other hand grew from Sh6.1 billion to Sh11 billion partly as a result of the reclassification.

The value of undeveloped plots held by NSSF rose from Sh7.7 billion to Sh8.7 billion between 2012 and 2013, although Mr Lang’at said the fund has not bought any new land for the past 10 years.

NSSF’s total investment size grew from Sh110 billion in 2012 to Sh134.9 billion last year largely boosted by appreciation in its quoted equities, which expanded from Sh36.3 billion to Sh51.1 billion, a 40 per cent growth. In 2013, the stock market registered a second straight year of growth, with the NSE All Share Index registering a 44 per cent growth.

Its portfolio size is, however, second to that of Pinebridge Investment, which, according to data from RBA was managing Sh156 billion at the end of last year.

READ: Pinebridge beats NSSF in portfolio size for first time

This marked the first time that the State pension scheme has been overtaken by a private funds manager in the overall portfolio stakes. According to NSSF, pensioners earned returns of between 17 and 20 per cent from their savings in the Fund last year.

The net return on investment increased from Sh1.74 billion in 2012 to Sh27.32 billion in 2013, due to a Sh24.55 billion increase in market value of the fund’s investments to Sh18.4 billion in 2013 from a negative of Sh6.2 billion in 2012.

Investment income rose by 10 per cent to Sh8.2 billion, mainly affected by the equities which comprise 40 per cent of the total portfolio.