ILAM FAHARI I-REIT REDEMPTION OFFER SET TO OPEN THIS WEDNESDAY

ILAM FAHARI I-REIT redemption offer set to open this Wednesday

By Donald Kogai

The Nairobi Securities Exchange (NSE)

listed real estate investment trust

ILAM Fahari Real Estate Investment

Trust (NSE: FAHR), conversion and

redemption offer seeking to redeem up

to 36.5 million units on the Nairobi

bourse as part of an operational

restructuring effort is set to open

this Wednesday, ICEA LION Asset

Management (ILAM) Chief Executive

Officer Mr. Einstein Kihanda has

confirmed.

In Kenya, the ILAM Fahari I-REIT has

invested in a portfolio of high-quality

investment real estate properties that

provide sustained returns and

operating performance, including

Nairobi’s Greenspan Mall, Highway

House, a three-storey industrial

building off Mombasa Road and 67

Gitanga Place .

Speaking during a media workshop on the

REIT conversion and redemption

process, Mr Kihanda said it is now all

systems go for the proposed Kshs 402

million monthlong offer that opens on

Wednesday, 6th September and closes on

Friday, 6th October 2023.

During the offer period, Mr. Kihanda,

who was accompanied by the ILAM Fahari

I-REIT CEO Mr Raphael Mwito, said the

REIT Trustee will be seeking to receive

redemption applications from non-

professional investors wishing to

redeem up to 36,585,134 Units currently

listed at the NSE, at a more than 82%

premium over the current trading price

as at the announcement date.

As part of the offer, the target unit

holders will have an opportunity to

either redeem their units at a

Redemption Offer Price of KSH 11 per

unit, top up to the Kshs 5 million

professional investors threshold as

prescribed by regulatory provisions or

opt to be bundled under a nominee

account holding all non-professional

investors who fail to take up the

redemption offer.

“ILAM has been working for the past

year to restructure the REIT to ensure

its sustainability and improve its

ability to generate returns for

unitholders. A recent strategy review

recommended undertaking an operational

restructuring plan, which paved the way

for this transaction,” Kihanda said,

adding, “This transaction provides a

viable path to restructure this popular

REIT without the price volatility

experienced on the NSE. We are clear

that the REIT needs to grow

substantially in size to achieve

economies of scale, which can only be

done through the acquisition of

assets.”

ILAM Fahari Real Estate Investment

Trust recently received regulatory

approval from the Capital Markets

Authority (CMA) to convert its

unrestricted ILAM Fahari Income Real

Estate Investment Trust (IFIR) into a

restricted I-REIT.

Alongside the operational restructuring

of the REIT, ILAM Fahari I-REIT Chief

Executive Officer Mr Raphael Mwito

reiterated that the firm has continued

to perform strategic and operational

functions in managing the property

portfolio and cash reserves to ensure

effective long-term management of the

REIT, deliver attractive investor

returns and ensure compliance with

regulatory and legislative

requirements.

“ILAM Fahari I-REIT aims to provide

consistent income and capital growth in

the long term. Our active management

approach targets quality properties

within carefully chosen economically

growing nodes,” said Mwito.

IFIR will remain regulated by the CMA

and is registered as a REIT with the

Kenya Revenue Authority (KRA), thus

continuing to enjoy statutory tax

advantages.

Last year, ILAM Fahari I-REIT’s

distributable earnings increased by 39%

to KShs. 141.9 million compared to

KShs. 102.0 million the previous year.

The ILAM Fahari I-REIT’s concept is

globally recognised. It operates in

line with international standards,

allowing the REIT to own and manage

income-generating real estate for the

benefit of its investors. The REIT

provides regular distributions to

investors, underpinned by commercial

leases.