The Capital Markets Authority (CMA), in collaboration with Sanduku Investment Initiative, the 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 with the Government’s Economic Transformation Agenda to deliver affordable housing units across the country. The affordable housing progamme will be executed under the Sanduku Investment Initiative, which will also include infrastructure. KNR will register all REITS for the development of affordable housing and infrastructure through Special Purpose Vehicles.
KNR has been conceptualized as an accreditation body for REITs and service providers within the value chain to ensure that 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. Evidently, REITs have the potential to facilitate access to capital through CMA to meet the growing demand for purpose-built real estate solutions including for those at the bottom of economic pyramid.
CMA Chief Executive Officer – Wyckliffe Shamiah
According to the APTAK President, Mr Hosea Kili, the Fund Managers Association and the Retirement Benefits Authority will collaborate with pension fund trustees to examine investment directives with the aim of encouraging pension funds to invest in REITs as a different type of asset.
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.
Sanduku Investment Initiative Chairperson – Mr. Tom Mulwa
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 is pleased to be part of this collaborative effort to issue REITs for affordable housing, which offers investors an opportunity to diversify their portfolios”.
Once the industry stakeholders validate the proposed model, further engagements will take place to ensure investment appetite and support as the rollout of affordable housing units picks momentum and traction. The structuring of a pilot REIT will follow this under KNR. The CMA initiative is expected to complement fund raising efforts for the joint affordable housing programme spearheaded by the National and County Governments.
REITs have unmatched potential for fund raising through the capital markets to support the affordable housing programme.
The NSE Chief Executive, Mr. Geoffrey Odundo
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