Mr Anthony Kilavi (left) at a past function. Photo/File
By MUGAMBI MUTEGI
IN SUMMARY
The scheme will dispose of some of the property estimated to be worth more than Sh21 billion.
The auction is set to excite real estate investors at a time of a property boom in the country that has seen home and office block prices rise 3.5 times in the past decade.
The scheme sold an office block that sits on a two-acre piece of land in Upper Hill, Nairobi, for Sh580 million to a local energy company in September.
The Kenya Railways pension scheme has whetted real estate investors’ appetite with plans to sell more property after a Sh665 million asset sale last year.
The scheme will dispose of some of the property estimated to be worth more than Sh21 billion, including houses, to improve its cash flow and meet legal requirements — which bar pension funds from holding more than 30 per cent of their assets in property.
The sales will be steered by a subsidiary of Alexander Forbes; Corporate & Pension Trust Services, which was tapped in July 2012 to turnaround the then cash strapped scheme.
The auction is set to excite real estate investors at a time of a property boom in the country that has seen home and office block prices rise 3.5 times in the past decade — a return that has caught the eye of foreign investors.
“The scheme has 99 per cent property investment situated in various parts of Nairobi and Mombasa,” said Anthony Kilavi, the managing director for Corporate & Pension Trust Services.
“This continues to pose a significant liquidity challenge. We cannot pay our members using land and hence the need to sell off the land in order to improve our cash position.”
The scheme sold an office block that sits on a two-acre piece of land in Upper Hill, Nairobi, for Sh580 million to a local energy company in September.
It also ceded some land along Ngong Road for Sh85 million to an undisclosed buyer. Corporate & Pension Trust is looking to build a fund from the asset sales to include cash, equities and fixed security investments
“This action is expected to introduce an additional income stream for the scheme which will help stabilise its financial position and improve its capacity to progress the level of pensions being paid to pensioners,” said Mr Kilavi.
The scheme came into being with the concession of the railway to Rift Valley Railways in 2006, and was to take care of Kenya Railways Corporation’s 9,000 retirees.
To take care of the retirees’ obligations, some of the corporation’s property was transferred to the pension scheme, ranging from Muthurwa houses that sat on 57 acres and 22 acres at Railways Club to property on Ngong Road and Ngara areas.
READ: Rail pension scheme sells key assets
The scheme has since 2006 faced difficulty meeting financial obligations of its 9, 000 members. But the assets sales, backed by improved governance and aggressive pursuit of debtors, has seen Corporate & Pension Trust Services turnaround the scheme.
In 2011, the scheme had monthly bills of Sh55m, but was generating Sh26m from rental income, its main revenue stream. Corporate & Pension Trust has since reduced the arrears to Sh111m and grown the monthly rental income to Sh40m.
No comments :
Post a Comment