October 4, 2015

Stanlib Kenya in $120m Real Estate Investment Trust IPO

Dolapo Omidire

Stanlib Kenya Ltd. intends on raising up to $120m (12.5 billion Shillings) before November for the initial public offering (IPO) of what will be Kenya’s flagship Real Estate Investment Trust (REIT). Fahari I-REIT will be listed on the Nairobi Stock Exchange and SBG Securities, owned by the Standard Bank Group Ltd. will be the bookrunner for the IPO.

In a phone call with Bloomberg, Felix Gichaga, Stanlib Kenya’s Business Development Manager explained that the I-REIT offers investors diversification and allows ordinary Kenyans to get exposure to income-generating real estate assets, as the cost of entry is not as high as investing directly.

Kenya’s Capital Markets Authority (CMA) approved the Stanlib REIT for trading as part of “efforts to deepen and develop the capital markets by facilitating diversification of products available in the market.” This enables investors to buy units in the REIT in the same way they buy stock in a listed company, in exchange for rights or a portion of income generated by a portfolio of real estate.

The CMA’s move is particularly commendable as global institutional real estate investors with deep pockets are circling in on real estate markets across sub-Saharan Africa. While Nigeria already has 3 REITs, they are thinly traded. However, investors and stakeholders are pressuring capital market regulators and tax authorities to amend existing legislation that is hindering further growth and depth of the Nigerian REIT industry.

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