Property fund Stanlib Fahari I-Reit is set to invest at least Sh1.8 billion to acquire a new property by end of September to comply with rules requiring it to hold at least 75 per cent of its assets in income-generating real estate.
Fahari has so far invested 67 per cent of its assets in three properties including the Greenspan Mall in Nairobi’s Eastlands.
It has four months to hit the 75 per cent threshold as required of Real Estate Investment Trusts (Reits) within the first two years of their operations.
The listed fund says it is currently considering the purchase of a hotel valued at Sh2.5 billion with an annual rental income of Sh205 million, translating to an eight per cent yield.
The unnamed hotel occupies a space of 115,690 square feet. Fahari is also looking at an office building priced at Sh1.8 billion with an annual rental income of Sh132 million, representing a 7.2 per cent yield. The office building has 80,000 square feet of space.
“We plan to buy one of the properties by end of September,” Kenneth Masika, Fahari’s chief executive told the Business Daily.
He said Fahari has cash and cash-equivalents amounting to Sh1.2 billion, adding that it would borrow the balance to fund the buyout of the property it settles on.
Acquisition of the new property is part of the Reit’s medium-term plan to significantly scale up its operations to minimise the impact of expenses on returns.
Fahari’s net asset value per unit stood at Sh19.81 in the 13 months to December, falling below the offer price of Sh20 per unit in what the Reit attributed to initial setup costs of Sh139.9 million.
Fahari has announced plans to raise Sh9 billion in the near term from current and new investors to fund the purchase of more properties.
The fund in 2015 raised Sh3.6 billion by selling shares, also known as units, to investors seeking a slice of income and capital gains from the property market.
It used Sh2.4 billion of the cash to acquire the Greenspan Mall and office/light industrial buildings Bay Holdings Limited and Signature International Limited.