Capital Markets

NSE sets stage for counties to raise health funds from Reits

brokers

Brokers on the trading floor of the NSE. Utility Reits will target power and water services, allowing investors to put capital in special purpose vehicles. PHOTO | FILE

Summary

  • The NSE said it is ready to launch share units for both income and development purposes this year.
  • The move opens the way for companies to tap the market for building capital or dispose of assets through public sale.

The Nairobi Securities Exchange (NSE) has announced it will launch Real Estate Investment Trust (Reit) for the health and water sectors in the counties.

The NSE said it is ready to launch share units for both income and development purposes this year, opening the way for companies to tap the market for building capital or dispose of assets through public sale.

County governments have been planning major health and water investments over the past three years, but many projects have been hamstrung by lack of funds.

The bourse is holding consultations with counties on the units, the NSE chief executive officer Geoffrey Odundo said on the sidelines of a ceremony for the listing of the new Housing Finance (HF) rights shares.

“They are more like development Reits, but are more specialised. The health Reits will target investors building hospitals, which is quite good for county governments and their health expansion programmes,” said Mr Odundo.

“Utility Reits will target power and water services, allowing investors to put capital in special purpose vehicles in form of Reits. These are the kinds of options we want the county governments to consider as they plan to tap into capital markets,” he said.

The Capital Markets Authority has already licensed three Reit trustees—KCB, Cooperative Bank and Housing Finance— as well as six Reit managers.

READ: KCB gets regulator nod to operate as REIT trustee

Trustees Act as the custodians for the Reit (a stake in a property) unit holders by making sure the Reit manager invests prudently in exchange for a fee.

Real-estate firms and asset managers have indicated they will be participating in the Reits market once it is active.

Housing Finance managing director Frank Ireri said the company will consider using Reits to fund part of its planned Sh30 billion real-estate investments being done through subsidiary Kenya Building Society (KBS).

“One of our options for these developments is through the Reits, since we are lucky to have different sources of money from which we will choose as we go along. KBS is also in the process of applying to become a Reit manager,” said Mr Ireri.