Investors in Stanlib’s Real Estate Investment Trust (REIT) have recorded a total return of 6.5 per cent for the seven months to June even as the instrument posted a Sh53 million net profit.
Stanlib, which is owned by South Africa’s Johannesburg Stock Exchange-listed Liberty Holdings, says its Fahari I-REIT closed the period with revenues of Sh117.94 million, which includes rental income from three properties in Nairobi.
The instrument made its debut on the Nairobi Securities Exchange (NSE) in November last year after raising Sh3.6 billion out of a targeted Sh12.5 billion, a performance which was above its Sh2.6 billion listing threshold.
Stanlib indicated in its listing prospectus that it expects a 14 per cent return –-before expenses— on its property investments.
“Stanlib has substantially completed the acquisition of three assets since listing. They are Greenspan Mall, Bay Holdings and Highway House,” the firm said in a statement.
“The performance shows that the I-REIT is on course to deliver full-year distributions to investors.” A Reit is a unit of ownership in a real estate project allowing retail investors to participate in the capital intensive sector which has reaped high returns in the last decade.
Investors benefit from capital gains on the projects and cash distributions from rental and other income, with the value of the units exposed to market volatility just like ordinary shares.
They 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.
The listing of the Fahari I-Reit saw Kenya join South Africa and Ghana on the continent as the only markets with such an investment vehicle. Fahari I-Reit’s results capture the seven months to June, with its books set to be regularised in the current year.
The net asset value (NAV) – the difference of assets and liabilities – per unit stood at Sh19.52 with analysts stating that the current Reit price of Sh14.1 remains significantly discounted at 27.7 per cent of the NAV per unit.
The security was offered at a unit price of Sh20, with its current price representing a capital loss of Sh29.5 per cent.
Finance costs stood at Sh22.9 million while operating expenses stood at Sh113.7 million, including the cost of running the properties. Fahari I-Reit’s closed the seven months to June with assets of Sh3.7 billion with the investment property accounting for Sh2.4 billion.
Total liabilities are valued at Sh157.7 million which is split as Sh21.3 million in deferred tax and Sh136.3 billion in trade and other payables owed to various suppliers.
“Some 69 per cent of the Fahari I-REIT’s assets are properties while 31 per cent are in cash and near cash form, underlining its commitment to maintaining sufficient liquidity to facilitate payments to investors when they are due,” Stanlib said in a statement.
“There is no gearing at present. That is, the I-REIT is not yet exposed to debt. This minimises interest rate risks.”
Stanlib disclosed that Greenspan Mall, which hosts tenants such as Tuskys Supermarket, Ecobank, Standard Charted Bank, Chicken Inn and Bata, is 94 per cent occupied.
The two other properties, Bay Holdings and Highway House, do not have vacancies.