NAIROBI, Kenya, Apr 11 – Kenya’s only listed Real Estate Investment Fund Stanlib Fahari has acquired an office building in Lavington essentially fulfilling a Capital Markets Authority requirement of having at least 75 percent of its net assets in income generating real estate.
Chief Executive Kenneth Masika told Capital FM Business that the firm is positioned to take up a low rise Grade A located on Gitanga Road in Lavington area.
Masika says the Sh850 million building is a 41,000 square feet leased to a blue-chip tenant with an income yield of 8.33 percent.
The firm was required to hold at least 75 per cent of its net assets in the income-generating real estate by September 30, 2017 but the CMA allowed a six-month extension.
As of last year, it had invested 68 per cent of its portfolio in such assets, leaving a shortfall of seven per cent.
“I am glad to announce that we did find an asset, we have actually signed an agreement, paid the deposit, what we are actually waiting for now are regulatory approvals which we will receive from CMA as well as shareholder approval since the asset is more than 15 percent of the fund value,” Masika explained.
The Reit was listed at the NSE in November 2015 following an Initial Public Offer that raised about Sh3.5 billion and has invested about 2.4 billion in three seed assets the largest one being Greenspan Mall in Donholm and two smaller light industrial and office buildings in the industrial area.
“The rest of the money was invested in fixed deposits and treasury bills in line with our investment policy. Going forward we are keen on getting hospitality assets and investing in light industry buildings,” he explained.
Last month, the fund announced a dividend return of 75 cents per unit to its shareholders for the full year ended December 31, 2017, which was an increase compared to 43 cents in the first half of 2017.
Masika expects the property market to rebound in 2018 following a slug in 2017 owing to the prolonged electioneering period and a slowdown in private sector credit growth.
“I expect an appreciation in terms of Capital returns for properties this year, there is also talks of an amendment and review of the interest rates capping that has slowed the economy,” he reflected.