Financial services group UAP Holdings is packaging its commercial property into a real-estate investment vehicle as it prepares to list it at the Nairobi Securities Exchange (NSE).
The over-the-counter market-traded firm, whose core business is insurance, said it was in the process of structuring an investment Real Estate Investment Trusts (Reits), commonly referred to as i-Reit, that allows holders to share rental yields of the listed property.
I-Reits facilitate introduction of property worth at least Sh300 million into the securities exchange through sale of stake to the public.
Some of the property owned by the firm include Telkom Plaza, Union Towers and Equity Centre which hosts Equity Bank.
“We are structuring an investment Reit. We are going through internal processes so I can’t tell you which properties will be offered,” said group MD Dominic Kiarie.
He however ruled out the company issuing a development Reit which is structured around ongoing projects, saying that the UAP did not want to spread itself too thin.
Reits is a new concept in Kenya. It helps property developers to access cheaper financing while also giving opportunity to retail investors to own part of the growing real-estate sector.
Despite several companies registering interest to issue Reits, none has been issued since introduction a year ago.
Developers have blamed the delay on lack of understanding of the product by both the market and the regulator resulting in slow processing of applications.
National Social Security Fund, Home Afrika, Housing Finance and Centum Investments are some of the companies that have declared intent to issue Reits with NSSF having identified the property it wanted to offer to the public.
The Capital Markets Authority has licensed recently launched UAP Investments as a Reit manager. A Reit manager is supervised by trustee with CMA having licensed only two trustees.
UAP Investments also operates as a fund manager and has accumulated a portfolio of estimated at Sh10 billion since its licensing early this year.
Some of the real estate projects being undertaken by UAP include the 33 storey UAP Towers in Upper Hill, Nairobi. The company plans to start the second phase of its UAP Heights Apartments project in Juba, South Sudan, next month.
The project involves construction of 22 two and three-bedroomed residential units at a cost of between Sh850 million and Sh1.3 billion. Mr Kiaries said the first phase of 15 two-bedroom houses was fully occupied.
Early this month the insurer raised Sh2 billion through a corporate bond and announced intention to use the cash to strengthen regional businesses including the demerger of life and general business in Uganda. The company is present in South Sudan, Rwanda, Uganda and Tanzania.
UAP plans to list at NSE in the second half of next year. Its shares are currently trading at an estimated price of Sh101 compared to Sh60 two years ago.