By GEOFFREY IRUNGU
In Summary
Stanlib Fahari-Income Reit, floated amidst huge
publicity a year ago, has lost more than half of its share price on the
Nairobi Securities Exchange (NSE) since its peak level despite the
touted attraction of real estate investments.
The company’s share traded at Sh10.40 yesterday compared to the peak price of Sh23.75 and Sh20 at which it was floated.
“The fall in price is remarkable because it has
come with the trading of mostly small amounts of between 100 and 500
shares. There is still limited understanding of Reit products,” said
Faith Mwangi, a research analyst at Standard Investment Bank.
Ms Mwangi said the low price of the Reit may have
been an overreaction in the market that still has many investors who
have little experience with the product. The Fahari I-Reit has also seen
quite some negative performance in the past 12 months, just like
several companies with poor financial performance including Uchumi
Supermarkets.
Limited understanding
Besides lack of adequate information on Reits and
what the payouts will look like, the Stanlib Fahari I-Reit has also been
affected by the general fall in market prices of firms listed on the
NSE. In the year-to-date, the NSE 20 Share Index has shed more than 20
per cent.
Ms Mwangi noted the limited understanding of the
Reit market may have contributed to the postponement of the closure
dates and subsequent massive under-subscription of Fusion Development
Reit. Fusion closed after three extensions. The company managed 38 per
cent of the Sh2.3 billion target.
“People are waiting to see what is going to be the
payout from their investments in the first Reit. They want to see how it
is going to be calculated. For Stanlib Fahari Reit a year is not yet
complete, so investors are still waiting to see what happens,” said Ms
Mwangi.
The Fahari I-Reit is intended to be paid using cash generated from rental real estate establishments.
The Fusion D-Reit, on the other hand, is for
intended real estate development with the Sh2.3 billion needed to
finance the construction of Greenwood City, a mixed-use real estate
project in Meru County.
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