FUND manager Stanlib raised cash to buy the three buildings it targeted from the sale of the country's first investment Real Estate Investment Trusts between October 22 and November 18.
Stanlib's Fahari I-REIT put on sale 625 million units priced at Sh20 a piece, targeting a maximum of Sh12.5 billion.
The company, however, raised Sh3.6 billion from the initial public offering, it announced last week, 38.46 per cent above the minimum target of Sh2.6 billion.
“Stanlib Kenya Limited [the issuer] is pleased to announce the offer exceeded the success threshold of Sh2.6 billion as it has received applications for units amounting to Sh3,619,446,000,” the fund manager, owned by South Africa's Liberty Group, said.
The minimum investment in Fahari I-REIT was Sh20,000 for individuals and Sh1 million [about Sh9,806] for institutions.
Analysts said the offer did not meet the maximum target, largely due to little clarity on potential returns and competition from high-yielding Treasury Bills which offered up to 22.5 per cent yield in October.
“For this type of venture, investors needed clarity on the expected capital appreciation, current and optimised rental yields for each of the properties so that they could make an informed decision,” Cytonn Investments said in its weekly market report. “The lack of sufficient information therefore served to make investors even more wary since there was no basis that could be used to make a decision on whether to invest.”
Stanlib had already identified three buildings in Nairobi's Eastlands and Industrial Area as priority for the cash from the country's debut issue.
Greenspan Shopping Mall in Donholm will gobble up 56.67 per cent of the cash. Stanlib inked a deal to buy the four-storey Greenspan, which has 173,353 square feet of lettable space with Tuskys Supermarkets as anchor tenant, for Sh2.04 billion.
About Sh211 million is being invested in Bay Holdings in Industrial Area, which has 27,329 square feet of space. Bay Holdings is fully-let with a commercial bank among the tenants.
Fahari I-REIT will also pump Sh107.1 million into three-storey, 8,489-square-foot Highway House along Pokomo Road in the same location, wich is also fully let.
During the launch of the IPO at the Nairobi Securities Exchange, Stanlib regional director for East Africa James Muratha said the firm was keen on prime property, including mixed-use developments, shopping malls, warehouses, offices, residences, hotels and resorts.
This was largely dependent on hitting the maximum target of Sh12.5 billion.
Under its investment plan, the ceiling for investment in office and retail space is 75 per cent of the total portfolio, and 15 per cent each for the remainder of the real estate sub-sectors.
On the first day of trading on the NSE, the Fahari I-REIT gained 18.75 per cent per unit after selling for 23.75 per unit. The official launch of the listing is set for this Friday, when the company will shed more information on its investment plan.
Analysts at Cytonn Investments said Kenya should learn from South Africa – world's eighth largest REIT market – in developing its infant market. Ghana and Nigeria are the only other countries in Africa with a REIT market.
“For the other licensed REIT managers looking to list their REITs in the stock exchange, studying Stanlib and other REIT markets in Africa will provide an added advantage to ensure higher levels of success,” Cytonn said in its report.