Property fund Stanlib Fahari I-Reit risks delisting from the Nairobi Securities Exchange if its net assets in real estate does not reach the 75 per cent threshold set by the Capital Market Authority
The Reit, the first on NSE, has until March 31 to acquire Sh245 million assets or return the funds back to investors according to regulations.
In September last year, it was given a regulatory exemption by the Capital Markets Authority to extend their deadline of acquiring the assets after failing to utilise their investments funds in 24 months which lapsed on September 30 after listing.
“An evaluation will be conducted after the deadline to determine the level of compliance with the relevant regulations,” the authority said.
De-listing is usually a last resort and would be subject to consideration by the unit holders having taken into account all relevant factors and regulatory obligations.
“Our total investment property is currently valued at Sh2.4 billion, which is about 68 per cent of the fund’s total net asset value, resulting in a shortfall of Sh245 million or seven per cent,” Reit CEO Kenneth Masika said.
He attributed the delay in not meeting the 75 per cent threshold to overpricing of properties and a pro-longed electioneering period in 2017 that slowed down business and scared away investors.
To get the seven per cent in order to avoid another non-compliance occurring, Masika said they have to acquire a new property and increase its property holding, failure to which they can declare a dividend that will re-balance the fund.
Nonetheless, sources close to the REIT say there is an existing back and forth push among top executives likely to delay the acquisitions.
This is also depicted in a move made by the REIT early last year when they delayed to report their 2016 financial results and had to ask the regulator for an extension.
Stanlib is owned by South Africa’s Johannesburg Stock Exchange-listed Liberty Holdings, and it launched the Reit to acquire and manage commercial and residential buildings for rental income.
“We have funds to purchase the properties. What remains is approval by board members. Once that is done, we will manage to hit the March 31, deadline,” Masika said.
He did not disclose when they are likely to purchase or what kind of property they are looking to invest in.
With only two months remaining, experts in the REITS sector say returning the funds back to investors will have a devastating impact on the REIT whose value is 50 per cent lower from its listing price of Sh20 per share. Yesterday, its share closed at Sh10.80
A quick analysis of the firm’s activities indicates that they have made no major acquisition since launch apart from making a significant investment in Greenspan Mall in Donholm, in Nairobi’s Eastlands.