The Kenya Railways Staff Retirement Benefits Scheme has sent out notices of intention to sell prime land in Nairobi after failing to get a buyer who meets its valuation since last year.
The pension scheme is seeking to raise billions of shillings from the sale, with one of the parcels likely to fetch more than Sh1.7 billion, in an effort to meet its financial obligations and comply with regulatory guidelines.
The scheme has since mid-last year struggled to find a buyer for its 3.24-acre plot on Matumbato Road in Upper Hill, where an acre averages Sh543.40 million, meaning it is looking at a quotation of not less than Sh1.76 billion.
The fund re-advertised the same plot last month together with a 0.48 acre plot on Woodlands Road near Hurlingham, but again failed to find a buyer. The two plots have been placed on sale again.
In addition, the organisation has also advertised for the first time the sale of 0.71 acre land on Ngong Road in Nairobi.
The scheme’s chief executive, Simon Nyakundi, who declined to publicly disclose the reserve price for the plots, insists bids below market price will be rejected.
“We did not get a serious buyer so that’s why we are going back again with the same property,” he said on phone.
“We are looking at market value because you don’t sell anything below the market (value), and market value is what willing buyer, willing seller agree guided by principles of valuation.”
The scheme has for years failed to honour pension payments to its ageing members as it continues to hold most of its assets in land and buildings valued at nearly Sh31 billion.
This is in violation of prudential guidelines by the Retirement Benefits Authority (RBA), which limits property holding at 30 per cent of the total portfolio of pension funds.
“We want to diversify our portfolio into other asset mix because we are overweight on property and, therefore, we are complying with the RBA regulations by selling part of the land,” said Mr Nyakundi.
“When you diversify then you leave a bit of it in deposit and a bit in cash so that you are able to meet your liabilities.”
Failure to pay pension has seen some of the scheme’s nearly 10,000 members die in abject poverty before they could enjoy the fruits of their lifetime savings.