Kenya’s leading retailer by branch network, Nakumatt, will set up shop at Fusion Capital’s Greenwood City mall in Meru town.
Fusion Capital’s real estate director Daniel Kamau said 45 per cent of the mall space has already been booked with Nakumatt Holdings as the anchor tenant while Mimosa Pharmacy, Optica and Lynn Marie (beauty products maker) are sub-anchors.
The mall will have a supermarket and four floors of 150 shops. It is expected to be completed by August next year.
“There are ongoing negotiations with key retailers such as Java House and Deacons Kenya who are looking into moving in,” Mr Kamau said.
The announcement comes as the country’s first development trust fund enters the homestretch to raise Sh2.3 billion by Friday.
Fusion Capital development real estate investment trust (D-Reit) was listed on the Nairobi Securities Exchange (NSE) offering 100 million units going for Sh23 each.
A D-Reit is a tax-efficient, listed collective investment instrument that allows investors to pull capital to develop large-scale real estate properties.
The minimum number of units one can buy is 218,000 units at Sh5 million. It will start trading on July 28.
In a note to clients, Cytonn Investments said the D-Reit has a possible internal rate of return of up to 20.5 per cent.
“As compared to other investment opportunities such as a five-year Kenya Treasury-bond currently yielding 13.2 per cent, [this Reit] offers equity IRR of 20.5 per cent. In our view, given the 700 bps spread above the yield on the 5-year bond, we recommend investors’ participation in the D-Reit,” Cytonn said.
The firm said, however, the key risk is the ability of the development to be executed within the defined parameters.
Cytonn said it calculated the return based on the assumption that the investments will get 100 per cent uptake for the residential apartments and 100 per cent occupancy for the retail and office rentals, and 24 months’ construction period for an over 50,000 square metre mixed-use development.
The returns will not attract income taxes, an incentive confirmed by the Kenya Revenue Authority (KRA). This is the second tax exemption order by the taxman after the Stanlib I-Reit offer last year.