Stanlib Reit goes for NSE listing after attaining minimum threshold

Kenya’s first Income-Real Estate Investment Trust (Reit) issued by Stanlib Investments has raised Sh3.6 billion of the targeted Sh12.5 billion in an outcome that analysts have attributed to competition from other instruments and the market’s poor grasp of the concept.

Promoters of the trail-blazing Fahari I-Reit, however termed it a success, having exceeded the minimum Sh2.6 billion target it they had set for listing.

“Following the closing date of receipt of applications and payment for units in the Stanlib Fahari I-Reit on Wednesday November 18, 2015, Stanlib Kenya Limited (the issuer) is pleased to announce that the offer exceeded the success threshold of Sh2.6 billion as it has received applications for units amounting to Sh3,619,446,000,” said Stanlib.

African Alliance Investment Bank chief executive Alistair Gould said the offer came at a time of high interest rates that made raising cash difficult.

He noted the market is yet to have a grasp of how the new investment works. “This year was bound to be a difficult one for capital raising especially for a new product that people are not familiar with,” Mr Gould told the Business Daily.
He notes the offer, subscribed only 29 per cent, was in competition with high-yielding government securities.

The Reit went on sale on October 22 with Stanlib Investments indicating the offer would have a minimum annual return of 14 per cent.

READ: Stanlib aims to raise Sh12.5 through Reits offer
Around the same time the 182-day Treasury bill was yielding 22.29 per cent interest rate.

“They were competing with high interest rate instruments,” said Mr Gould. He believes the offer was still a success as it managed to raise Sh3.6 billion despite the tough market conditions.

Family Bank also managed to raise Sh2 billion, half the Sh4 billion it was looking forward to netting through its debut bond.

The bank attributed the shortfall to the high interest rate environment and market jitters after the collapse of Imperial Bank.

Other transaction advisers said the Stanlib’s I-Reit did not get enough subscription since the market is still unfamiliar with the units.

“Either people did not fully understand the offer or they were not convinced about the returns,” ABC Capital corporate finance and advisory manager Johnson Nderi said.

The Reit offer was extended by a week after Stanlib asked for more time from the regulator in response to investor queries.

READ: Stanlib aims to raise Sh12.5 through Reits offer