Fusion Capital goes to market with Sh2.3b D-Reit

Private equity firm Fusion Capital has opened the sale of the country’s first development real estate investment trust (D-Reit), seeking to raise Sh2.3 billion.

The firm is targeting professional investors with the minimum buy in set at Sh5 million. Fusion has broken it down the D-Reit into 100 million units which will be up for sale at Sh23.

The company plans to use the funds generated to construct a mixed development property in Meru, christened Greenwood City. The property will have a blend of residential, retail and office spaces.

Fusion Capital Chief Executive Luke Kinoti said the firm had already raised Sh800 million to finance the project.

“We want to raise Sh1.4 billion (through the D-Reit). The whole project is Sh3.7 billion and we shall raise through debt from a local commercial bank Sh1.4 billion,” Mr Kinoti said.

Once complete Greenwood City will have a 25,000 square meter shopping mall, a grade A office block occupying 20,000 square meters, 50 two- and three-bedroom apartments and a public car park with 240 slots.

The capital markets authority in March approved the PE firm’s plans to raise a maximum Sh7.4 billion through two D-Reits, split between commercial and residential developments.

A D-Reit is a tax-efficient, listed collective investment instrument that allows investors to pull capital to develop large scale real estate units. Investors benefit from capital appreciation during the listing and construction window.

The Reit will be listed on the Nairobi Securities Exchange on July 28.

In 2015, Stanlib Investments become the first company to go to market with an investment real estate investment trust. The firm had planned to raise Sh12.5 billion but only managed to raise Sh3.6 billion which was the minimum target for the offer with analysts attributing it to poor market knowledge of the investment tool.