Market News

ICEA Lion buys Sh32m stake in property fund

ICEA

ICEA Lion Asset Management CEO Einstein Kihanda. PHOTO | SALATON NJAU | NMG

ICEA Lion Asset Management Limited has bought five million units (shares) valued at Sh32.5 million in property investment fund Ilam Fahari I-Reit which it manages.

The asset manager said the share purchases were normal trades on the Nairobi Securities Exchange (NSE) #ticker:NSE and reflected prevailing market prices.

“This transaction with the related party was at arm’s length,” the property fund said in its latest annual report.

The investment saw ICEA become the eighth largest shareholder of the Reit with a 2.76 percent stake.

The asset manager became the property fund’s promoter and manager in May 2020, inheriting the roles from Stanlib Kenya which it acquired in a cash transaction.

ICEA’s purchase of Reit’s shares comes as its stock price continues to lag its tangible value.

The property fund had a net asset value per unit/share of Sh19.58 in the year ended December, indicating that it is trading at a discount of 66.8 percent.

Its profitability has however been weak, resulting in a return on net assets of less than five percent.

The Reit reported a net loss of Sh123.9 million in the review period, reversing a net profit of Sh148 million the year before.

The performance was attributed to lower rental income after Tuskys supermarket –the former anchor tenant at the flagship Greenspan Mall— defaulted and was evicted.

There was also reduced rent collection from the rest of the tenants at the shopping complex.

ICEA said the property fund could be restructured in the near future.

“Unitholders of the I-Reit and the investing public are advised that the I-Reit Manager has undertaken a strategic review of the I-Reit, with the Trustee’s consent which, if approved and implemented, may involve a restructuring of the I-Reit,” the trustees of the property fund said in a notice.

[email protected]