The government wants to tap into the capita market to finance the affordable housing programme.
The Capital Markets Authority (CMA) is currently engaging stakeholders on the formation of a public real estate management trust to manage the housing projects.
Kenya National Real Estate Investment Trust has been conceptualised as an accreditation body for Real Estate Investment Trusts (REITs) and service providers within the REITs value chain.
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REITS are companies that own or finance income-producing real estate across a range of property sectors.
REITs are companies that own or finance income-producing real estate across a range of property sectors.
Through KNR the government seeks to ensure the investment grade REITs are structured for immediate investor uptake.
The CMA Chief Executive Officer Wyckliffe Shamiah said REITs have been identified by the National Government as a critical avenue to ramp up the rollout of affordable housing units through a public and private sector partnership.
“Evidently, REITs have the potential to facilitate access to capital through the capital markets to meet the growing demand for purpose-built real estate solutions including for those at the bottom of economic pyramid,” said Shamiah.
Formation of the KNR, which will be the focal point for engagement with policy makers, is being undertaken jointly with Sanduku Investment Initiative, Association of Pension Trustees and Administrators of Kenya (APTAK) and the Nairobi Securities Exchange (NSE).
According to CMA, KNR is aligned to the Government’s Economic Transformation Agenda to deliver affordable housing units across the country.
The affordable housing programme will be executed under the Sanduku Investment Initiative, which will also include infrastructure.
KNR will register all REITS for the development of affordable housing and infrastructure through Special Purpose Vehicles.
Once the industry stakeholders validate the proposed model, further engagements will take place to ensure there is investment appetite and support as the rollout of affordable housing units picks momentum and traction.
The structuring of a pilot REIT under KNR will follow this. The capital markets initiative is expected to complement fund raising efforts for the on-going joint affordable housing programme spearheaded by the National and County Governments.
“The Fund Managers Association and the Retirement Benefits Authority will work with trustees of pension funds in reviewing investment mandates to facilitate participation by pension funds in REITs as an alternative asset class’’ said APTAK President, Hosea Kili.
Sanduku Investment Initiative chairperson, Tom Mulwa said REITs that will be registered under the Kenya National REIT initiative are expected to be scalable with the potential to contribute to national economic growth, employment creation, and avail decent housing to deserving Kenyans.
“This objective is also aligned to the government’s commitment to support deepening of the domestic capital market,’’ he said.
The NSE Chief Executive, Geoffrey Odundo noted that REITs have unmatched potential for fund raising through the capital markets to support the affordable housing programme.
Kenya became the third African country in 2013 to establish REITs as an investment vehicle with the REIT Regulations providing for Income-REITs, Development-REITs and Islamic-REITs.
“The use of REITs for affordable housing is expected to enhance liquidity and offer investors good returns," said Odundo.
