Stanlib Kenya Real Estate Fund Eyes Rights Offers Every 2 Yearsby
Fahari I-Reit to debut on Nairobi stock exchange Nov. 25
Proceeds of IPO to fund office buildings, shopping malls
Stanlib Kenya Ltd., the first company to offer a real estate investment trust in East Africa’s biggest economy, plans to raise money from shareholders every two years to fund acquisitions of commercial and retail property.
The unit of Johannesburg-based Standard Bank Group Ltd. opened an initial public offering of its Stanlib Fahari Income-REIT on Oct. 22, seeking to raise 12.5 billion shillings ($122 million). It’s scheduled to start trading on the Nairobi Securities Exchange on Nov. 26, after the offering was extended by a week.
Fahari I-REIT, which derives its name from the Swahili word for magnificence, may expand “into a larger fund investing in the property market in the entire East Africa," Anton Borkum, chief executive officer of Stanlib Kenya’s real-estate unit, said in an interview in Nairobi, the capital.
"We will seek to hold rights issues once every 18 to 30 months -- could be earlier -- depending on identified properties, how quickly we conduct due diligence," Borkum said on Monday. "I should imagine two-year cycles going onto the market."
Stanlib is building its real-estate investment exposure in Kenya because it’s become an entry point for international companies, he said. Google Inc., International Business Machines Corp. and Microsoft Corp. have opened regional headquarters in Nairobi, drawn by the country’s relative political stability, growing economy and educated workforce.
"It used to be South Africa, but multinationals are looking a lot at Kenya as a regional head office for operations in East Africa," Borkum said. "Strategic location is phenomenal, something South Africa misses, and this is a great opportunity for us."
Nairobi is a regional trade hub -- it’s port at Mombasa is East Africa’s biggest that serves countries including Uganda, Rwanda, South Sudan and the Democratic Republic of Congo. The city’s main airport also provides links to country’s across sub-Saharan Africa.
The Fahari I-REIT IPO will help finance the purchase of 2.5 billion shillings of properties by the end of November and a second lot of real estate, including office buildings in Nairobi and a shopping center in the port city of Mombasa, valued at as much as 7.5 billion shillings, said Borkum. Other acquisitions lined up include plans for 3.5 billion shillings of warehouses, an office park and a second shopping center in Mombasa, he said.
"We are looking at creating a diversified portfolio both by geography and sector," Borkum said. "In future, we are going to target hotels and students housing."