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.
