Capital Markets

Fusion Capital tests market with Sh2.3bn Reits offer

Fusion Capital has opened the sale of its development real estate investment trust, commonly referred to as D-Reit, at Sh23 per unit.

The real-estate developer aims to raise Sh2.3 billion through the sale of 100 million units in a sale that closes on July 15.

Fusion Capital is raising cash to develop a mixed residential, office and retail project on a six acre plot in Meru dubbed Greenwood City.

Investors in the Reit will require a minimum of Sh5 million, equivalent to 218,000 units, to participate in the offer which targets fund managers and high-net worth individuals.

The units of the first D-Reit to be issued in Kenya will be listed at the Nairobi Securities Exchange on July 28.

“We are delighted to be the first to give other investors a chance to access development returns in Kenya by investing in property development through a D-Reit,” said Fusion chief executive Luke Kinoti.

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.

The project is valued at Sh3.7 billion with the mall taking up the most at Sh1.2 billion. The firm will spend Sh728 million to develop offices and Sh407 million in residential units.

An artistic impression of the Meru Greenwood Park. PHOTO | COURTESY
An artistic impression of the Meru Greenwood Park. PHOTO | COURTESY

Fusion estimates it will pay Sh308 million to finance the project, 8.3 per cent of the project. Professional fees will take Sh573 million which is 15.4 per cent of the estimated cost of the project. The company has secured a Sh1.4 billion debt from NIC Bank to bridge the difference between the Reit size and the estimated cost of the project.