The Nairobi Securities Exchange has opened doors for institutional and retail investors to share in returns from real estate sector without owning physical property.
The Real Estate Investment segment opened yesterday, with the first offer by fund manager Stanlib going for Sh20 per unit [an equivalent of a share for equities].
StanLib has set a minimum of Sh20,000 for individuals and Sh1 million for institutions in the initial public offering targeting to raise between Sh2.6 billion and Sh12.5 billion through 625 million units.
The sale which runs to November 12 was approved by the Capital Markets Authority on October 2.
The units will list on the NSE on November 24, making Nairobi the third exchange in sub-Saharan Africa after Johannesburg and Lagos to trade in property trusts.
StanLib, owned by South Africa’s Liberty Group, will buy and manage prime property, hoping to cash in on ever-rising rental income and capital gains.
The firm’s East Africa director James Muratha said its I-REIT will target a “diverse, professionally-selected property” with investors earning an annual return.
“This will probably give us a spark in the market because investors have been asking for an opportunity to invest in real estate in East Africa through an affordable avenue,” NSE chief executive Edward Odundo said. “It is going to change the way we think even for the young investors who would like to acquire property big amount of money.”
CMA acting chief executive Paul Muthaura said an application for a development REIT – which allows investors to acquire land and develop residential and commercial properties for sale or letting – was under consideration.
He did not disclose its identity.
“For a long time developers have had to go to negotiate with banks with very great uncertainty on the off-take when they raising this capital,” he said. “With the introduction of development REIT, we will have a much more structured and transparent way where you can collect public funds for matter of property development.”