Stanlib aims to raise Sh12.5bn through first Reit offer in Kenya

Stanlib Investments is looking to raise up to Sh12.5 billion through a Real Estate Investment Trust (Reit), the first such security to be launched in Kenya.

The Capital Markets Authority (CMA), the industry regulator, has given Stanlib the green light to issue the Reit.

Stanlib plans to raise the money through an Income Reit (I-Reit), which generates revenues for investors through rent from its property holdings.

“Stanlib Fahari I-Reit will issue an initial public offer for investors to subscribe to units in the new Reit which is expected to raise a minimum of Sh2.6 billion and a maximum of Sh12.5 billion. The unrestricted IPO will be listed on the main investment market segment of the Nairobi Securities Exchange (NSE),” said the CMA in a statement.

The CMA and Stanlib did not indicate what types of properties will be in the Reit or when the issue will hit the market.

Stanlib had earlier announced that they expected the Reit to be ready in the first half of the year and and that it was looking at raising around Sh10.5 billion ($100 million).

The Fahari I-Reit will be the first Reit since the laws allowing for the new securities to be introduced in the market came into effect in 2012. The Reits have been touted as one of the ways that will allow both large and small investors to enter the capital-intensive real estate market as they allow pooling funds to either buy rental properties or to financing developments.

READ: UK property firm seeks Sh5bn ahead of Nairobi listing

Property consultants say that since the Kenyan market is still opaque it is difficult to say the expected returns from I-Reits but offices and retail properties can attract rental yields of between 10 and 14 per cent.

Knight Frank managing director Ben Woodhams said some types of properties such as offices can attract net returns of about 10 per cent but added that this is a rough estimate since insufficient data on transactions makes analysis difficult.

“It is difficult to say since the investment market is not developed that much,” Mr Woodhams told the Business Daily.

Centum Investments, which has also announced intentions to issue a Reit, estimates that its Two Rivers Development, coming up in the Runda suburb of Nairobi County, will generate annual rental yields of 14 per cent.

HF Group is another firm that has announced plans to issue a Reit.

Transparency, liquidity and diversification in the real estate industry are the other additional benefits that are expected from the introduction of REITs.

“The approval of Stanlib Fahari I-Reit marks a fundamental step towards efforts to deepen and develop the capital markets by facilitating diversification of products available in the market,” said CMA acting chief executive Paul Muthaura.