Stanlib Fahari-Income Reit, floated amidst huge publicity a year ago, has lost more than half of its share price on the Nairobi Securities Exchange (NSE) since its peak level despite the touted attraction of real estate investments.
The company’s share traded at Sh10.40 yesterday compared to the peak price of Sh23.75 and Sh20 at which it was floated.
“The fall in price is remarkable because it has come with the trading of mostly small amounts of between 100 and 500 shares. There is still limited understanding of Reit products,” said Faith Mwangi, a research analyst at Standard Investment Bank.
Ms Mwangi said the low price of the Reit may have been an overreaction in the market that still has many investors who have little experience with the product. The Fahari I-Reit has also seen quite some negative performance in the past 12 months, just like several companies with poor financial performance including Uchumi Supermarkets.
Besides lack of adequate information on Reits and what the payouts will look like, the Stanlib Fahari I-Reit has also been affected by the general fall in market prices of firms listed on the NSE. In the year-to-date, the NSE 20 Share Index has shed more than 20 per cent.
Ms Mwangi noted the limited understanding of the Reit market may have contributed to the postponement of the closure dates and subsequent massive under-subscription of Fusion Development Reit. Fusion closed after three extensions. The company managed 38 per cent of the Sh2.3 billion target.
“People are waiting to see what is going to be the payout from their investments in the first Reit. They want to see how it is going to be calculated. For Stanlib Fahari Reit a year is not yet complete, so investors are still waiting to see what happens,” said Ms Mwangi.
The Fahari I-Reit is intended to be paid using cash generated from rental real estate establishments.
The Fusion D-Reit, on the other hand, is for intended real estate development with the Sh2.3 billion needed to finance the construction of Greenwood City, a mixed-use real estate project in Meru County.