CONTACTS: +254 726879488 (Mobile)
+254770 455 116 (Office)
By Phyllis MUCHOKI
Kenya’s Local Authorities Pension Trust (LAPTRUST) Wednesday listed the first Income- Real Estate Investment Trust (I-REIT) at the Nairobi Securities Exchange (NSE).
President William Ruto presided over the listing by introduction of Laptrust Imara I-reit at the Nairobi bourse with the bell-ringing ritual signifying the admission of first income – REIT by a pension administrator at the Nairobi bourse.
The LAPTRUST Imara I-REIT listed 346,231,413 units at Sh20 each, placing its valuation at Sh6.9 billion.
The I-REIT, a closed-ended fund, will be listed on the restricted sub-segment of the main investment market segment of the NSE. As a closed-ended fund, persons wishing to invest in LAPTRUST Imara I-REIT shall effect such investments by purchasing the REIT Securities in the secondary market.
“Pension funds have traditionally been reluctant to invest in real estate, but with the introduction of innovative asset instruments such as REITs, they can now access the huge potential of property-backed investments,” offered CPF Financial Services MD, Hosea Kili.
Kenya is among the African countries that established Reits as an alternative means for financing real estate projects, with the NSE – listed Ilam Fahari I-Reit, pioneering the concept.
Others are Acorn Student Accommodation I-REIT, and Acorn Student Accommodation D-REIT, with the latest listing of Imara I-REIT, bringing that number to two listed REITs at the NSE.
REITs are regulated collective investment schemes where their managers source funds to build or acquire real estate assets, which they sell or rent to generate income. The income is then distributed to the investors.
REITs are a decent inflation hedge as they benefit from rent increases and property price increases. Similarly, they are considered very attractive because, by law, they have to pay out at least 90 percent of their net earnings to shareholders and should indeed be measured for a fixed income.