State-run pensions body, NSSF has said non-profitable properties in its portfolio will be sold off, starting with its 13-floor Hazina Plaza in Mombasa.
In a notice, NSSF managing trustee Anthony Omerikwa said prospective buyers of the prime property that formerly housed the four star Polana Hotel should submit their proposals by March 26.
“We are rethinking past investment decisions with a view of getting out of businesses not beneficial to fund members. In some properties, we faced challenges on non-remittance of rent leading to litigations but we are over it now,” he told Business Daily.
In total, NSSF holds Sh31.8 billion worth of property, developed and undeveloped land, accounting for 14.3 percent of its total net assets of Sh251 billion.
The employees’ retirement funds manager bought Hazina Plaza in Mombasa in 1994 at a cost of Sh450 million from Canon Investments.
The pension body then leased it to Polana Hotel, who left after a while paving way for new leasing to used car dealers, hotels, a supermarket and Turkish furniture shop.
However, due to non-payment and delays in payment by some of the new tenants, NSSF missed on its targeted return from the property.
The Auditor-General’s office said later that NSSF lost cash with rent arrears amounting to Sh239.5 million remaining unremitted by the contracted property manager— with Sh66.5 million remitted to NSSF by September 2016 instead of the expected Sh323.6 million.
“So far the fund has not realised any value for money from the investment of Sh450 million in Hazina Plaza Mombasa since 1994. The unrealised benefit from the investments in Hazina Plaza casts doubt on prudent financial management of the lease for the interest of contributors,” said the AG in his report.
Other NSSF properties include NSSF Complex worth Sh8.4 billion, comprising blocks A, B, C and a parking silo on Nairobi’s Bishop Road, Bruce House(Sh2.8 billion) while the View Park Towers also in Nairobi was worth Sh2.5 billion as at June 2018.