Stanlib Investments is set to buy Greenspan Mall in Donholm, Nairobi, with proceeds from Kenya’s first ever Real Estate Investment Trust (Reit) sales.
Stanlib Investments says the mixed development is one of the properties to be bought with proceeds of its Investment (I)-Reit that opened Thursday.
The firm plans to raise as much as Sh12.5 billion through the initial public offering (IPO) dubbed Fahari I-Reit that will go towards buying a mix of rental properties.
The offer will sell 625 million units—similar to shares—each at Sh20. Investors will need to but at least 1,000 shares or Sh20,000 worth to participate in the offer that closes on November 16.
The Reit will be listed at the Nairobi Securities Exchange (NSE) on November 24 for trading.
The firm’s regional director James Muratha said the I-Reit will invest in shopping malls, residential units, hospitals, hotels, offices and warehouses with rental yields of at least 14 per cent.
“We have set the minimum rate of return at 14 per cent per year,” said Mr Muratha at the launch.
The I-Reit is expected to rise in value in tandem with the property appreciation. The mix of properties is meant to give investors in the I-Reit exposure to different types of properties.
An investor presentation by Stanlib showed the rents on the underlying properties are expected to increase by at least 12.5 per cent every two years.
The presentation further showed the Fahari I-Reit will buy an office block in Nairobi’s Industrial Area and a warehouse in the same location.
The Fahari I-Reit is also looking at the possibility of investing in five other office blocks in Nairobi, a shopping mall and an office block in Mombasa.
Stanlib’s I-Reit is the first such issue after the Capital Markets Authority, the industry regulator, introduced laws for the new securities three years ago.
Reits are expected to make it easier for companies to pool funds for either buying rental properties or for developing properties. It will at the same time give retail investors the opportunity to invest in the capital intensive real estate sector.
“The launch of Reits further enhances financial inclusion in our capital markets as average investors will now be able to invest in large-scale commercial, residential and industrial properties, without requiring large sums of money,” said NSE chief executive Geoffrey Odundo.
Under the offer, 25 per cent of the units have been set aside for East African and foreign retail and individual investors.
Regional institutional investors have been allocated 55 per cent of the offer while foreign institutional investors will take up the remaining 20 per cent.
The NSE is banking on Reits to usher back investors who have in the last few months opted for Treasury bills, bonds and bank fixed deposit accounts.