Stanlib launches Kenya’s first Real Estate Investment Trust

The Stanlib Fahari Real Estate Investment Trust (REIT) was opened on October 22^nd, coinciding with the Nairobi Securities Exchange (NSE), now the fourth African bourse to launch the REITs market.

Stanlib released their public offer at a minimum subscription of Ksh20, 000 (1000 units) and a nominal value of Ksh20 each. The offer closes on November 16^th.

The REIT will then be listed at the NSE on November 24^th for trading.

The firm plans to raise as much as Ksh12.5 billion through the initial public offering (IPO).  The funds raised will go towards buying a mix of properties, Greenspan being the first of them. Further projects to follow are an office block and warehouse in Nairobi’s Industrial Area.

According to the firm’s regional director, James Muratha, other properties through the I-REIT investments will also include residential units, hospitals, office blocks, shopping malls and warehouses with rental yields of up to 14 per cent.

“We have set the minimum rate of return at 14 per cent per year,” said Muratha at the launch.

The mix of properties is meant to give investors the I-REIT exposure to different types of properties. The investments are expected to rise in value as the property appreciates through the years.

A presentation done by the firm showed a 12.5 per cent raise every two years in the rent of the underlying properties.

The offer will sell 625 million units, each at6 Ksh20. Each investor will have to buy at least 1000 shares or 20,000 worth to participate in the offer.

REITs are expected to make it easier for companies to pool funds for either buying rental properties or for developing properties.

It will, at the same time, give retail investors the opportunity to invest in the capital-intensive real estate sector.

“The launch of REITs further enhances financial inclusion in our capital markets as average investors will now be able to invest in large-scale commercial, residential and industrial properties, without requiring large sums of money,” said NSE chief executive Geoffrey Odundo.

The US has the world’s most advanced REIT market.

In Africa, growth in this market has been limited by the absence of enabling legislation.

South Africa has traded in REITs for the last 10 years, while Ghana has had access to REITs since 1994 and Nigeria 2007.