Stanlib plans sh 1 bn REIT fund
Fund manager Stanlib Kenya plans to roll out its Real Estate Investment Trust by the end of the year, nearly two years after getting the go-ahead from the Capital Markets Authority.
Stanlib, owned by South Africa’s Liberty Group, intends to list commercial and residential property valued at about Sh3 billion in the first three years.
“We are hoping in the next two months we should have the REIT up and
running. The process is at an advanced level. We made applications to the CMA, we are still engaging and hope that we will have it(approval) very soon,” said regional director for East Africa, James Muratha.
Stanlib is among five REIT managers licensed by the CMA in line with the Capital Markets’ Real Estate Investment Trusts and Collective Investment Schemes Regulations of 2013.
Others are Fusion Investment Management, CIC Asset Management, Centum Asset Managers and UAP Investments.
The instruments allow retail investors to invest in real estate projects, the same way they do in bonds and stocks trading on the Nairobi Securities Exchange, through mutual funds.
REITs may invest directly into property to earn rental income and capital gains on sale, or in mortgage securities tied to property that generate interest income.
Muratha said the Stanlib REIT is targeting a Sh1 billion fund, growing to Sh3 billion in three years.
It will be listed on the NSE, giving investors an exit route by offering liquidity similar to quoted equities.
“The REIT will make it easier for institutions and individuals to get a piece of the booming property market by breaking the units of ownership into shares allotted to the participating investors,” said Muratha.
Stanlib will earn fees from acquiring and managing the property porfolios, with investors getting annual returns through dividends from rent collections.
The REIT will provide an opportunity for retail investors, small-sized institutions and pension schemes to invest in real estate sector with capital from Sh300,000.
“Through the REIT, we are creating an income vehicle for investors who don’t have enough funds to put up their own income generating property,” he said.
While the REIT will focus on generating rental income, investors are also expected to get distributions arising from capital gains in occasional property sales.
Rapid urbanisation and, economic and population growth have been cited as drivers of housing developments.
“If you look at the projected population growth from 40 million to 60 million in the next 15 years, there is need for more accommodation, and an investment platform that will give an opportunity for people to own homes, rent and build other related infrastructure,” Muratha said.
The growth of REIT is projected to help governments harness opportunities in the capital market, and increase accessibility to long term funds for developers in Africa.
With the REIT, low-income earners can pool their resources and invest in real estate projects.
The Stanlib Fund is part of its parent company, Liberty Group’s, ambitious Sh22.7 billion expansion plan in 16 African countries, it announced last week.
The multinational is targeting a 25 per cent growth in Kenya. It plans to more than double its market share from the current four per cent to 10 per cent within the next five years through its subsidiaries.
Source: the star