Period: November 30 to December 6, 2015

Why Real Estate may not always be ideal

3/12/2015: The Standard, Home & away Magazine, page 3

•  According to a real estate expert, many investors are putting premium on plots for housing development and not on Land in general.
• Investors are acquiring plots and putting up several rental units without considering pros and cons that come with it.
• When factors such as tax on rental income, land rates, interests on loans and other associated costs such as agent fees and maintenance costs, it takes long for an investor to recoup initial money invested, let alone start making profit.
• Good productive land would give better returns when used for agriculture activities for example, dairy farming, than putting up rental houses on the same.

Housing Crisis will not improve

3/12/2015: Daily Nation, DN2 Magazine, page 6

• Despite making great strides in improving the housing condition in the country critics have argued that little has done to accommodate the surging population at the capital in Nairobi and the region.
• According to Hass consult, while the middle upper housing markets are facing a housing glut, the lower middle class is finding it difficult to locate suitable housing.
• Matters have further been complicated by a sharp increase in land rates and county government construction fees, which in the process have increased financial disincentives to housing development.

Entry of International players into the Real Estate Market in Kenya

6/12/2015: Cytonn Monthly Report – November 2015

• The month of November 2015, has seen many international players coming into the Kenya’s real estate market, mainly because of :
  • Growth in the middle income segment of the market, which is driven by both formal and informal sectors.
  • Growth of satellite towns in the Nairobi, metropolis which have been made accessible for development due to infrastructural upgrades up and around Nairobi.
  • The emergence of institutional developers who are focused on catering for the inherent demand in the economy created by the housing shortfall.
• South African firms have recently exhibited an increased appetite for sub-Saharan markets such as Kenya and Nigeria.
• The largest listed REIT in South Africa is planning to enter the Kenyan real estate market via its Pan African Fund.
• Growth point will be targeting to raise USD 500mn to invest in real estate across select markets in Africa
• The pan African Fund will be targeting to invest 80% of the fund in income properties with the remaining 20% being invested in development properties.
• Delta Africa property Holdings has entered into an agreement to buy 45.5% equity in Buffalo Mall for 418mn.
  The deal is estimated to be finalized by March 2016.
• Hyprop Investments Limited (Hyprop) a south African real estate Investment Trust(REIT) and Attacq Limited, a JSE listed real estate capital growth fund have acquired Ikeja city mall, Lagos largest mall comprising of over 22,000m2 and has a tenant mix anchored by Shoprite and several other global luxury stores, with their holding at 75% and 25% respectively

Stanlib Fahari I-REIT Results

6/12/2015: Cytonn Monthly Report – November 2015

• Stanlib Fahari I-Reit results were announced and they raised 3.6bn out of the targeted Ksh 12.5bn, which is 71.2% below the maximum amount that would have been raised.
• The REIT was currently up 6.3% at Ksh 21.20, while on the First day of trading, each REIT unit was trading at Ksh 23.75 which is an 18% increase from the Ksh 20.0 IPO offer price.
• The REIT Manager will spend the funds raised from the IPO to buy Greenspan mall.
• The current yield on Greenspan Mall is about 8.1%.
• Stanlib also plans to buy Highway house, an office block in Nairobi’s Industrial area and Bay holdings Industrial Area Branch-a warehouse – for a combined Ksh 318mn.