State sets aside Sh1.2bn deposit for two NSSF buildings
Posted Wednesday, June 27 2012 at 22:20
The State has set aside Sh1.2 billion down payment for two commercial buildings in Nairobi owned by the national retirement fund, NSSF.
An additional Sh1.6 billion will be paid to the National Social Security Fund for Hazina and View Park towers, closing the Sh2.8 billion transaction.
Housing permanent secretary Tirop Kosgey, confirmed that the government had committed to acquire the buildings, but said the price tag could change depending on findings from a fresh valuation.
“The price will be confirmed after a new valuation by a government valuer,” said Mr Kosgey, whose ministry received Sh1.2 billion from the Treasury for the purpose of acquiring the buildings earlier this month.
The buildings have a combined space of about 850,000 square feet. “We will negotiate so that the NSSF is paid the balance using negotiable instruments like promissory notes or Treasury Bills/Bonds,” he added.
The transaction is among the single largest deals in Kenya’s property market, coming months after the World Bank acquired a 21-storey office block in the Upper Hill area from a company associated with Indian billionaire Mukesh Ambani for Sh2.2 billion.
Among the other recent big deals in the property market was the acquisition of former Standard Chartered Bank’s Nairobi headquarters along Moi Avenue by the family of the late poultry billionaire Nelson Muguku for Sh650 million.
Tom Odongo, the acting Managing Trustee at NSSF, acknowledged that the government had expressed interest in buying the two buildings , but no commitments had been made so far.
“We received an expression of interest from the government, but there have not been any conclusive negotiations,” he said, adding that “NSSF is still keen to sell the buildings to review our asset portfolio.”
NSSF had earmarked the twin buildings within Nairobi’s CBD for sale since late last year as it sought to slash its investments held in property to comply with industry guidelines on asset allocation for retirement schemes, pegged at 30 per cent of the entire portfolio.
A sharp decline in the value of marketable securities in NSSF’s portfolio last year pushed the value of assets as a proportion of the total assets to 39 per cent from 34 per cent, worsening its compliance standing against the RBA guidelines.
The fund’s property investments were valued at Sh38 billion at the end of last year. The government plans to use the buildings to house offices and commissions created under the new Constitution.