The Competition Authority of Kenya (CAK) has given Stanlib Investments the go-ahead to buy Greenspan Mall through its new real-estate fund.
Stanlib Investments is proposing to buy Greenspan Mall in Embakasi, Nairobi, using proceeds from Kenya’s debut Income-Real Estate Investment Trust (Reit) issue.
Stanlib’s Fahari I-Reit will buy Greenspan Mall for Sh2 billion.
Competition Authority of Kenya director-general Wang’ombe Kariuki said the proposed deal meets the legal threshold for the acquisition to go ahead.
“The merger shall not affect competition negatively and (b) the acquirer had no turnover for the preceding year, 2014 as is newly established, while that of the target was Sh202,598,073, which is below the required merger threshold for mandatory notification as contained in the Merger Threshold Guidelines,” he said.
Stanlib’s Fahari-I Reit was targeting to raise as much as Sh12.5 billion and was supposed to list on the Nairobi Securities Exchange (NSE) on Thursday but the listing date has been postponed after the day was declared a public holiday due to the visit by Pope Francis.
The International Finance Corporation (IFC) has already committed Sh1.5 billion to the property fund.
The Fahari I-Reit will use proceeds from the offer to buy rental properties. In addition to Greenspan Mall, two other office blocks in Nairobi’s Industrial Area node have been identified for purchase.
Analysts say while the properties to be bought have conditions that allow for rent to be increased, in the long-term rents may rise slowly since more office space is expected to come to the market.
“Fahari I-Reit unit holders are well cushioned against inflation with rent escalation rate between 6 per cent and 7.5 per cent per annum being above 6.72 per cent inflation rate. However, we note the boom within the construction sector with the upcoming 3.11 million square feet office space as well as shopping complexes which could increase competition leading to lower property yield,” said a report by Sterling Capital.
Property developers and consultants MML Group earlier in the year said in their office market report that the biggest supply in office space would be Kilimani, Upper Hill and Westlands in Nairobi.
MML, however, said it expects demand for Grade A rental offices that meet global standards to continue growing. The consultancy found that only 10 out of 41 new office blocks surveyed had met the international parking standard of three spaces per 1,000 square foot.
The report also found that on average office rents had increased by six per cent last year.