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Stanlib Investment plans to buy Greenspan mall for Sh2 billion

Stanlib Investment, freshly boosted by Sh1.5 billion IFC injection, plans to buy the Greenspan Mall in Donholm for Sh2billion after its Real Estate Investment Trust (Reit) sale.

The information memorandum on Stanlib’s Fahari Income Reit (I-Reit), the first such offering in Kenya, says it is among three properties targeted with proceeds from the offer that aims to raise as much as Sh12.5 billion.

It notes that the mall will generate rent of up to Sh167 million per year.

“The development comprises 270 residential units and a retail centre with a gross lettable area of approximately 16,105 square metres with 1,000 parking spaces. The retail centre is located on 3.8 hectares (9.5 acres). The net rental income for 2015 is approximately $1.64 million (Sh167 million) per annum and the estimated net yield is 8.1 per cent with a five-year internal rate of return (IRR) of 18.56 per cent at property level.”

Stanlib additionally plans to buy Highway House, an office block in Nairobi’s Industrial Area and Bay Holdings Industrial Area Branch—a warehouse- for a combined Sh318 million.

Stanlib is also looking at the possibility of investing in five other office blocks in Nairobi, a shopping mall and an office block in Mombasa.

The Fahari-I Reit was launched last week and results are expected in mid-November. The Reit will then be listed on the Nairobi Securities Exchange (NSE) on November 24.

The International Finance Corporation (IFC) has in the meantime announced its intention to invest Sh1.5 billion in the Fahari I-Reit. Disclosure documents by the IFC show that its proposed investment is meant to give other investors’ confidence in Kenya’s first Reit.

“IFC’s investment will help validate Reits as a means for: (i) domestic investors to access investment opportunities in Kenya’s real estate sector; and (ii) real estate developers to avail themselves financial resources from local capital markets in order to expand their building.”

More Reit issuers are expected and the Capital Markets Authority has already received an application for a development Reit.

Development Reits pool funds from investors and then construct houses, shopping malls or offices for sale. Investors are then paid from proceeds from the sale of the units.