Stanlib boosts land bank ahead of NSE listing

Housing projects at New Milimani estate in Kisumu. Investment firms have raised stakes in property thanks to high returns. Photo/JACOB OWITI 

By CHARLES MWANIKI

In Summary

• Stanlib has housing projects worth over Sh2.5 billion ($30 million) either under construction or in the planning stage.
• The fund manager is one of the many investment firms that have raised their stakes in the real estate sector to take advantage of high returns.
• The company plans to launch a real estate investment trust (reits) in Kenya by the end of the year.

Stanlib, a fund management firm, has bought land worth Sh1.7 billion ($20 million) in the past six months for development of real estate projects, ahead of the expected listing of property on the NSE.

The firm also has housing projects worth over Sh2.5 billion ($30 million) either under construction or in the planning stage, chief investment officer of the firm Kenneth Kaniu said on Monday in a presentation to investors and the media.

“The (land) assets are distributed in major towns in Kenya such as Nairobi, Mombasa, Nakuru and Eldoret,” said Mr Kaniu.

The fund manager is one of the many investment companies that have raised their stakes in the real estate sector to take advantage of high returns — averaging more than 15 per cent per annum — over the past decade.

Stanlib announced that it plans to launch a real estate investment trust (reits) in Kenya by the end of the year. The regional funds management service provider says it will launch the trust with an eye on listing the trust on the Nairobi Securities Exchange (NSE).

“We expect the regulations to be ratified by June, and so we should roll out by the end of the year. Having done assessment and spoken to clients, we think we could get up to Sh50 billion in our initial funds drive,” said Mr Kaniu.

Stanlib also said additional real estate projects worth Sh5.4 billion ($64 million) are in the pipeline. Property developers will be required to have a minimum capital base of Sh50 million to qualify for a licence to manage Reits.

(Read: CMA sets Sh50m capital base for property managers)

Mr Kaniu said Stanlib plans to offer Income Reit (I-Reit), which are required under the draft regulations to have real estate assets of a minimum value of Sh300 million and will be required to invest at least 75 per cent of total assets in income producing real estate.

Once the I-Reit is in place, members of the public can then buy into the trusts from a minimum of Sh5,000 to Sh10,000, Mr Kaniu added.

The other kind of Reit is the development and construction real estate investment trust (D-Reit) which will be required to generate at least 50 per cent of income from gains made in developing, constructing or selling of real estate or income made from acquisition of property for rental income. This type of Reit must also have real estate assets of at least Sh100 million.

Stanlib investment manager in charge of properties Mr Raphael Mwito said the firm’s Reits will target the hospitality segment, noting that it offers the best prospects for growth of investor funds.

“We expect at least 10 hotels to open in Nairobi in the next two years. Our reits plans target this sector, because we have seen the payback period is good, for example for hotels it averages at around seven years,” said Mr Mwito.

Africa Reits Ltd, a firm which operates this type of investment locally, is not listed on the securities exchange. Several other fund managers offer property management portfolios locally.

In mid 2012, Centum injected Sh3.6 billion in its real estates unit with plans to add Sh3 billion in the next three years, and invited high net-worth investors like insurance companies, pension schemes and foreign investors to put their money into a Sh30 billion property fund for construction.


 In the global Reits market, which is in 60 countries, the average total return was 16 per cent, higher than that of fixed income investments.