NSSF Sh2.9 billion deal with Treasury close to collapse

The Treasury. NSSF has given the government until March 31 to allocate funds to buy two of its buildings. Photo/SALATON NJAU 

By Mugambi Mutegi

In Summary

• NSSF is considering selling Hazina Towers and View Park Towers to private investors.
• NSSF has given Treasury up to March 31 to raise the Sh2.9 billion.
• The sale of the two office blocks was meant to help NSSF comply with the asset allocation limits set by the regulator Retirement Benefits Authority (RBA).

The Sh2.9 billion deal between National Social Security Fund (NSSF) and Treasury for the purchase of two office blocks in Nairobi’s city centre is on the verge of collapse after the government failed to meet the terms.

The fund Thursday said it was considering selling Hazina Towers and View Park Towers to private investors, whom it had rejected after the government offer that was hinged on curbing the State’s rising rental bill and need to get accommodation for the widening public service.

The government had promised to make a down payment of Sh1.6 billion by last June but failed due to lack of funds on rising expenditure amid below target revenues.

Now, the NSSF has given Treasury up to March 31 to raise the Sh2.9 billion — which looks remote because the supplementary budget was completed two weeks ago and Parliament has gone on recess ahead of the March 4 General Election.

“If Treasury will not have allocated the funds by the end of March we will be forced to go back to the open market,” said Tom Odongo, the NSSF managing trustee, in a telephone interview with the Business Daily Thursday.

“The (housing) ministry has been keen on buying the two buildings and this is why we retracted the initial publicly advertised sale in order to give them priority.”

The sale of the two office blocks was meant to help NSSF comply with the asset allocation limits set by the regulator Retirement Benefits Authority (RBA).

READ: NSSF seeks quick sales to reduce real estate assets

Retirement laws bar pension and provident schemes from investing more than 30 per cent of their assets on property.

The NSSF’s property investment stood at 39 per cent in December 2011 from 34 per cent in June the same year. The fund is yet to release 2012 numbers.

Housing permanent secretary Tirop Kosgey says his ministry has now suspended negotiations with NSSF following the non-payment, pending fresh guidance from Treasury.

“Treasury had initially promised to fund the deal but it appears they experienced financial constraints and the money was not budgeted, stalling negotiations,” said Mr Tirop.

“If the money is not awarded this time around, we will have no option but to let NSSF go ahead and offer the properties to other interested parties.”

The two buildings have a combined space of about 850,000 square feet, intended to house government offices and commissions created under the new Constitution.

The two buildings located along University Way are expected to tame government’s rising rent bill that stands at slightly above Sh2 billion annually, according to Mr Kosgey.