As part of efforts to deepen the capital markets, the Capital Markets Authority (CMA) has granted approval for the issue and listing of two Development Real Estate Investment Trust Schemes (D-REIT) on the Nairobi Securities Exchange. The two schemes, issued by Fusion Capital Limited, are a commercial and a residential D-REIT. The approval is issued pursuant to Regulation 18 of the Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations, 2013.
The approval will facilitate the issue and listing of new units of the commercial D-REIT of a minimum of Kshs1.15 billion and a maximum of Kshs2.3 billion. The residential D-REIT has separately been approved to issue and list new units of a minimum of Kshs2.58 billion and a maximum of Kshs5.16 billion. The residential and commercial D-REIT are restricted offers, open only to professional investors, with a nominal value of Kshs17 and Kshs23 per unit, respectively. Professional investors are subject to a minimum investment threshold of Kshs5 million.
The CMA Acting Chief Executive, Mr Paul Muthaura, noted ‘’the approval of the first Development REIT schemes, is in line with our mandate to facilitate uptake of the innovative product to support the growth ambitions of the vibrant real estate sector’’.
Mr Muthaura added, ‘’this is a significant milestone towards realizing the aspirations of the 10-year Capital Market Master Plan, which aims to position Kenya as the premiere destination for capital and a fund-raising hub on the continent and beyond’’.
A real estate investment trust scheme (REIT) is a collective investment scheme structured as a trust where an investor owns rights or interests in property in the form of units and earns returns from income or capital gains.
A D-REIT is a development and construction real estate investment trust involved in the development of housing, commercial or other real estate related development and construction projects.