Deal commenced last month (September) and targets the redemption of up to 36.5 million REIT units currently trading at the Nairobi Securities Exchange from non-professional investors at Sh11 per unit
The NSE listed real estate investment trust ILAM Fahari Real Estate Investment Trust is seeking to redeem up to 36.5 million units on the Nairobi bourse to ensure its sustainability and improve its ability to generate returns for unitholders.
The ILAM Fahari I-REIT has invested in a portfolio of high-quality investment real estate properties that provide sustained returns and operating performance, including Nairobi’s Greenspan Mall, Highway House, a three-storey industrial building off Mombasa Road and 67 Gitanga Place.
Speaking during a media workshop on the REIT conversion and redemption process, ICEA LION Asset Management (ILAM) chief executive Mr. Einstein Kihanda confirmed that it is now all systems go for the proposed Sh402 million month-long offer that opened on September 6, and closes on October 6, 2023.
During the offer period, Mr. Kihanda, who was accompanied by the ILAM Fahari I-REIT CEO Mr. Raphael Mwito, said the REIT trustee will be seeking to receive redemption applications from non-professional investors wishing to redeem up to 36,585,134 units currently listed at the Nairobi Securities Exchange (NSE), at a premium of more than 82% over the trading price as at the announcement date.
As part of the offer, the target unit holders will have an opportunity to either redeem their units at a Redemption Offer Price of Sh11 per unit, top up to the Sh5 million professional investors threshold as prescribed by regulatory provisions or opt to be bundled under a nominee account holding all non-professional investors who fail to take up the redemption offer.
“A recent strategy review recommended undertaking an operational restructuring plan, which paved the way for this transaction,” Kihanda said. “This transaction provides a viable path to restructure the REIT. We are clear that the REIT needs to grow substantially in size to achieve economies of scale, which can only be done through the acquisition of assets.”
ILAM Fahari Real Estate Investment Trust recently received regulatory approval from the Capital Markets Authority (CMA) to convert its unrestricted ILAM Fahari Income Real Estate Investment Trust (IFIR) into a
restricted I-REIT.
Alongside the operational restructuring of the REIT, ILAM Fahari I-REIT Chief Executive Officer Mr Raphael Mwito reiterated that the firm has continued to perform strategic and operational functions in managing the property portfolio and cash reserves to ensure effective long-term management of the REIT, deliver attractive investor returns and ensure compliance with regulatory and legislative requirements.
“ILAM Fahari I-REIT aims to provide consistent income and capital growth in the long term. Our active management approach targets quality properties within carefully chosen economically growing nodes,” said Mwito.
IFIR will remain regulated by the CMA and is registered as a REIT with the Kenya Revenue Authority (KRA), thus continuing to enjoy statutory tax advantages.
Last year, ILAM Fahari I-REIT’s distributable earnings increased by 39% to KShs. 141.9 million compared to KShs. 102.0 million the previous year.
The ILAM Fahari I-REIT’s concept is globally recognised. It operates in line with international standards, allowing the REIT to own and manage income-generating real estate for the benefit of its investors. The REIT provides regular distributions to investors, underpinned by commercial leases.
