Stanlib Investments became the first company to list a real-estate investment trust (Reit) at the Nairobi Securities Exchange charting the path for other property owners and developers to tap retail funds.
Other companies that have registered interest in using Reit to unlock their investments include insurer UAP Holdings, listed investment firm Centum and public pension fund National Social Security Fund (NSSF).
Stanlib Investments raised Sh3.6 billion of the targeted Sh12.5 billion but was still listed at the NSE after it met the minimum threshold of Sh2.6 billion.
The investment firm was charged with carrying out a lot of public awareness on the new concept which other listings will hope to reap from.
The Reit is currently trading at Sh20.75 a unit, marginally above the listing price of Sh20. Companies have set sights on issuance of investment Reits, commonly referred to i-Reit, which facilitate introduction of an existing property worth at least Sh300 million into the securities exchange through sale of stake to the public.
Investors of i-Reit reap the rental income from the underlying property.
Stanlib will spend Sh2 billion, or 55.6 per cent of the cash raised from the IPO, to buy Greenspan Mall. The current yield on Greenspan is approximately 8.1 per cent.
“Real estate market is undergoing a lot of transformation and we see institutionalisation of real estate development being the new way and this is really good for the growth of the market as it helps attract foreign capital into the Kenyan market,” said Cytonn Investments.
Centum plans to issue a development Reit (d-Reit) to help complete the ambitious Two Rivers project. The project includes a five-star and three-star hotels, a hospital, residential and office space set on a 102-acre piece of land next to Runda estate, Nairobi. Development Reit allows investors to buy a stake in the project before its completion and earn rental income or capital gains upon it being put in the market.
UAP which owns Telkom Plaza, Union Towers and Equity Centre among other buildings has started internal processes of structuring an i-Reit.
NSSF had identified Bruce House and the NSSF complex block A, B, C plus the parking silo, all in Nairobi, and the Social Security House in Mombasa for offering to the public. The pension fund has however been beleaguered by corruption claims for the last two years stalling the listing.
Kenyan real estate sector is capital intensive locking out a huge proportion of public from investing. This has resulted in low supply of residential and commercial properties.
The Nairobi Securities Exchange (NSE) structured the Reit concept to open the sector to the retail market.
The low uptake of the Stanlib Reit was attributed to high competition from other money markets instruments on offer at the same time.