The Capital Markets Authority (CMA) in collaboration with Sanduku Investment Initiative, Association of Pension Trustees and Administrators of Kenya (APTAK) and the Nairobi Securities Exchange (NSE) has made significant progress towards the creation of a Kenya National REIT (KNR).
KNR is aligned to the Government’s Economic Transformation Agenda to deliver affordable housing units across the country. The affordable housing programme will be executed under the Sanduku Investment Initiative, which will also include infrastructure. KNR will register all REITs (Real Estate Investment Trusts) for the development of affordable housing and infrastructure through Special Purpose Vehicles.
It is a funding initiative for Kenya’s Economic Transformation Agenda targeting participation by financial sector players (Pension funds, Saccos, Insurance companies, Islamic finance institutions, Banks) and Global investors with an objective of raising Sh1 trillion over the next five years.
KNR has been conceptualized as an accreditation body for REITs and service providers within the REITs value chain and to ensure the investment grade REITs are structured for immediate investor uptake. KNR will also be the focal point for engagement with policy makers.
“REITs have been identified by the National Government as a critical avenue to ramp up the rollout of affordable housing units through a public and private sector partnership,” CMA chief executive Mr Wyckliffe Shamiah said. “Evidently, REITs have the potential to facilitate access to capital through the capital markets to meet the growing demand for purpose-built real estate solutions including for those at the bottom of economic pyramid.”
APTAK President, Mr Hosea Kili said the Fund Managers Association and the Retirement Benefits Authority will work with trustees of pension funds in reviewing investment mandates to facilitate participation by pension funds in REITs as an alternative asset class.
Sanduku Investment Initiative Chairperson, Mr Tom Mulwa, said REITs that will be registered under the Kenya National REIT initiative are expected to be scalable with the potential to contribute to national economic growth, employment creation, and avail decent housing to deserving Kenyans.
“This objective is also aligned to the Government’s commitment to support deepening of the domestic capital market,” Mr Mulwa said.
NSE Chief Executive, Mr Geoffrey Odundo observed that REITs have unmatched potential for fund raising through the capital markets to support the affordable housing programme.
Kenya became the third African country in 2013 to establish REITs as an investment vehicle with the REIT Regulations providing for Income-REITs, Development-REITs and Islamic-REITs. The use of REITs for affordable housing is expected to enhance liquidity and offer investors good returns. The NSE REITs for affordable housing offers investors an opportunity to diversify their portfolios.
Once the industry stakeholders validate the proposed model, further engagements will take place to ensure there is investment appetite and support as the rollout of affordable housing units picks momentum and traction. This will be followed by the structuring of a pilot REIT under KNR. The capital markets initiative is expected to complement fund raising efforts for the ongoing joint affordable housing programme spearheaded by the National and County Governments. – BusinessToday