Asset managers eye boost from investment trusts

Asset managers have welcomed the establishment of more real estate investments trusts (Reits) to deepen the housing sector.

Reits are regulated property funds where investors pool cash and are able to earn profits from the incomes generated from the real estate investments.

ICEA Lion Asset Management Chief Executive Einstein Kihanda said that one of the biggest challenges faced by the Reits was their limited presence.

The company last year took over the management of Kenya’s only listed property fund, the Stanlib Fahari I-Reit, after acquiring the property fund’s former administrator, Stanlib Kenya.

“Reits provide a significant opportunity for property investors to professionalise the whole aspect of property investments by having pooled funds invest in property,” Mr Kihanda said in an interview with Home & Away.

Reit managers run properties including shopping malls, office buildings, hotels and apartments.

Late last year, student hostel developer Acorn received a licence to act as a Reit manager from the Capital Markets Authority (CMA). 

Acorn has two Reits; a Development Reit or D-Reit, which pools resources for construction of real estate, and an Income Reit (I-Reit), which purchases all completed and operational properties from the D-REIT and holds them for the long term.

Kihanda said the entrance of such players as Acorn would provide more opportunity for growth for the Reit sector.

“There’ll be wider public knowledge and interest … the more we have coming into the market the more significant,” he said.

Before its acquisition, the Fahari I-Reit had a disappointing performance. Kihanda declined to talk about its current performance, urging the market to wait for financial disclosures in March.

“We are in a closed season just ahead of reporting. I can’t talk in great detail about it that but we see ourselves recovering in 2021,” he said, projecting a recovery for the overall property market.