TRIFIC SEZ chief executive Brenda Mbathi speaking during a press briefing. /JACKTONE LAWI
Kenya’s capital
markets could soon get a new type of investment product after Two Rivers
International Finance & Innovation Centre (TRIFIC) announced plans to raise
nearly $30 million (about Sh3.88 billion) from the public.
The fund to be
raised through a property investment fund will trade on the Nairobi Securities
Exchange (NSE).
The company says
it expects the fund, known as the TRIFIC Green USD Income Real Estate
Investment Trust (I-REIT), to be listed on the NSE by the end of June after the
public offer closes on June 12.
The investment
vehicle is backed by the North Tower building at the Two Rivers International
Finance and Innovation Centre Special Economic Zone (SEZ) in Nairobi.
TRIFIC says the
minimum investment has been set at $1,000 (about Sh129,000), allowing smaller
investors to participate alongside pension funds, insurance firms and wealthy
individuals.
“This is a dollar-denominated I-REIT and the dividend yield is eight per cent payable
twice a year,” said TRIFIC SEZ chief executive Brenda Mbathi.
For ordinary
investors unfamiliar with REITs, an Income REIT works similarly to buying
shares in a company, except the money is invested in income-generating
property.
Investors then
earn returns from rental income collected from tenants.
The company aims
to raise $29.8 million (Sh3.86 billion), equivalent to 80 per cent of the value
of the building backing the REIT.
The North Tower,
which is already fully occupied, currently earns about $3.2 million 9Sh414.53
million) annually in rent from multinational firms operating in technology,
outsourcing, financial services and consulting.
One of the main
tenants is global outsourcing company Teleperformance, which occupies nearly
half of the available office space.
Unlike most Kenyan
property investments that collect rent in shillings, TRIFIC says its tenants
earn revenues in foreign currency because they export services to international
markets. As a result, rent is also charged in U.S. dollars.
The company argues
that this structure protects investors from losses caused by the weakening of
the Kenyan shilling while also exposing them to the fast-growing global
outsourcing and technology services industry.
The REIT is also
being marketed as Africa’s first green-certified, dollar-based income REIT
located within a private services-focused Special Economic Zone.
Special Economic
Zones are areas where businesses enjoy incentives such as lower taxes and
exemptions aimed at attracting investment and exports.
The company says
demand for office space within the zone is already growing, prompting plans for
expansion beyond the current North Tower.
TRIFIC has started
groundwork for a second office block estimated to cost $20 million (about Sh2.6
billion). The planned 15-floor building is expected to be completed within 18
months after construction begins.
“When we start
construction, we expect to complete it within 18 months to allow for first
occupancy,” Ms Mbathi said.
The REIT will be
managed by Nabo Capital, while NCBA Bank will act as trustee. KCB Investment
Bank and AIB AXYS are serving as placement agents.
The planned
listing comes at a time when Kenya’s REIT market remains relatively small
despite efforts to encourage alternative investments outside traditional shares
and government bonds.