STANLIB FAHARI I-REIT

STANLIB FAH AR I I - R EI T

Thriving in-line with Kenya’s economic rise www.stanlib.com/kenya

ame S T A N L I B

F A H A R I

I - R E I T

A Proud Heritage of

REAL ESTATE

STANLIB Kenya is spearheading the development of the listed real estate sector in East Africa Writer: Emily Jarvis Project Manager: Stuart Parker

2

TANLIB Kenya is a leading fund manager in the East African region with a strong track record which has been established over many years of managing assets for a wide array of clients including pensions, endowments, parastatals, corporates, governments, NGOs, churches, savings and credit co-operatives, and charitable organisations.

Reflecting a proud heritage of real estate innovation, STANLIB was an

WWW.AFRICAOUTLOOKMAG.COM

active participant in the engagements between real estate professionals and the Kenyan regulatory authorities which gave rise to legislation enabling the creation of Income (and Development) Real Estate Investment Trusts (“I-REITs” and “D-REITs” respectively).

Once the enabling legislation was in place, STANLIB Kenya implemented a project to build the framework of Kenya’s first I-REIT. This was followed by the November, 2015 Initial Public Offer (IPO) which culminated in the

C

O

N

S

T

R

U

C

T

I

O

N

INNOVATION listing of the STANLIB Fahari I-REIT. In addition to raising equity capital, this listing introduced the REIT sector to the Nairobi Securities Exchange.

Africa Outlook caught up with the REIT’s Chief Executive Officer, Anton Borkum about STANLIB’s past, present and future; as well as its forecasts for the industry at large.

Africa Outlook (AfO): Could you firstly talk me through the wider Group structure of the business; its current geographic footprint, its

portfolio size, and the current range of services and solutions offered by STANLIB in Kenya?

Anton Borkum (AB): STANLIB is a leading asset manager with onthe-ground operations in 10 African countries. It is among the largest unit trust companies by market share in South Africa. STANLIB manages and administers more than R560 billion (US$ 46 billion) in assets for more than 437,000 retail and institutional clients across Africa (as at end June, 2015). It offers a range of investment capabilities.

STANLIB Kenya is the Asset Manager of the STANLIB Fahari I-REIT, Kenya’s first REIT listed on the Nairobi Securities Exchange. As such, STANLIB Kenya is responsible for all elements of the Fund’s operation and performance.

AfO: Why in particular are you bullish on real estate in Kenya?

AB: The Kenyan economy has enjoyed a number of years of GDP growth in excess of five percent per annum.

This is expected to continue, with research houses such as The Economist

WWW.AFRICAOUTLOOKMAG.COM

3

S T A N L I B

F A H A R I

I - R E I T

JHI AFRICA

J

HI Africa is a proud subsidiary of the Excellerate Property Services Group of Companies.

Excellerate is Africa’s leading trusted provider of fully integrated, selfperforming property solutions that deliver quality, cost-effective results.

Greenspan Shopping Mall: A modern shopping mall within the middle income area of Donholm, approximately 15 kilometres to the east of the city centre of Nairobi

estimating Kenya’s real GDP growth for 2015 at 5.4 percent, with medium-term growth thereafter predicted around six percent; according to the EIU Country Report, Kenya October, 2015.

Such economic growth is stimulated by a rapidly urbanising population.

2010 statistics estimated that 22 percent of the Kenyan population resided within urban areas, and this is expected to exceed 50 percent by 2050, according to the World Bank 2011 Report; Developing Kenya’s Mortgage Market.

A 2013 Government-commissioned report - Hass Consult/KPDA State

of Development Report Q4 2013 estimated annual housing demand at 200,000 units, which is significantly above the annual supply of 35,000 units. Urbanisation, together with an influx of expatriates working in Kenya for international firms and growth in personal wealth have led to significant increases in residential house prices.

By 2014, economic activity related to real estate in Kenya had grown so much that the property sector was estimated to be the fourth largest contributor to the national GDP, according to Knight Frank’s Kenya Market Update for the second half of 2014.

Anton Borkum, CEO, STANLIB Fahari I-REIT Anton Borkum, 42 years of age, is currently the Chief Executive Officer of the STANLIB Fahari I-REIT. He was appointed to this position on 1 July, 2015. Prior to that, Anton previously held the position of Head of Direct Property Investments at STANLIB East Africa. Anton has imore than 10 years’ real-estate finance and investment experience. His duties include overall accountability for the performance of the REIT (as REIT CEO), as well as oversight over STANLIB’s property investment and real estate advisory activities in East Africa. He holds an MBA from Bond University and an MSc from Pretoria University, and has played significant roles in the structuring, negotiation and execution of many property transactions. Prior to STANLIB, Anton worked at Liberty Holdings as the Head of Group Corporate Finance.

4

WWW.AFRICAOUTLOOKMAG.COM

JHI Africa unlocks opportunities as a property services and advisory company in the areas of property development, leasing, sales and management. It leverages off Excellerate’s extensive knowledge and experience, technical capabilities, group synergies and its entrepreneurial drive to support the businesses of its wide client base by providing significant services that realise strategic goals, support efficiencies and protect the bottom line.

Across the African continent, JHI Africa helps its clients be more competitive in the market place and adds value to their businesses. The team at JHI Africa and Excellerate believe that Africa offers great opportunities for those who have the vision, flexibility and determination to adapt and succeed.

Excellerate operates in more than 11 African countries. Its Kenyan office is one of more than 30 Excellerate offices in Africa, all staffed by its operational network of experienced, dedicated professionals with excellent local country knowledge. With its growing African footprint, Excellerate through subsidiary companies like JHI Africa, is setting the pace for property service excellence on the continent.

Distinguished by its proud track record, Excellerate is a value-driven organisation that provides a wide range of integrated property solutions and services in Africa, delivered with excellence. Its extensive range of services include property management, transactional management, corporate real estate, facilities management and valuations and advisory.

www.jhi.co.za

S T A N L I B

F A H A R I

I - R E I T

Bay Holdings Industrial Area: Office property located along a main road within the main Industrial Area of Nairobi. The property is currently fully let

AfO: What specific customer and market trends are you subsequently observing in the property sector in Kenya then, and how are you responding to this through your service offering?

AB: The incentive for most Kenyan investors to invest in real estate is largely centred upon expectations of reliable capital growth. The challenge is to provide a real estate product which delivers capital appreciation, while at the same time providing a consistent income stream.

With the listing of the STANLIB Fahari I-REIT in November, 2015, a new

6

WWW.AFRICAOUTLOOKMAG.COM

The challenge is to provide a real estate product which delivers capital appreciation, while at the same time provides a consistent income stream

product was introduced to the Kenyan investment market. REITs provide a mechanism for aggregating large pools of capital (on behalf of investors), which can then be deployed into real estate investments. In this manner they deepen the capital markets in which they operate.

STANLIB Fahari I-REIT provides both retail and institutional investors with a listed investment product, with underlying exposure to the Kenyan real estate market. It provides investors with a transparent, well regulated, tax efficient investment structure, offering income and capital

C

O

N

S

T

R

U

C

T

I

O

N

Greenspan Shopping Mall exterior

L-R: Mr Bob Karina, Vice Chairman of the NSE; Mr. Geoffrey O.Odundo, Chief Executive, Nairobi Securities Exchange; Prof. Jacob Kaimenyi, Cabinet Secretary of Lands and Housing; STANLIB Ragional Director, James Muratha and John Ngumi, Chairman Kenya Pipeline Company share a light moment during the ceremonial listing of the STANLIB Fahari I-REIT at the NSE

returns as well as an opportunity for diversification into a new asset class, namely listed real estate.

For international investors, STANLIB Fahari I-REIT offers exposure to the growing Kenyan economy with specific tax dispensation from the Kenya Revenue Authority, a transparent investment vehicle allowing investors to understand what they have invested in, accessibility, liquidity, returns from net rental income as well as capital gains and a regulatory oversight of the Kenyan Capital Markets Authority.

For international investors, STANLIB Fahari I-REIT offers exposure to the growing Kenyan economy with specific tax dispensation from the Kenya Revenue Authority Think Business Investment Awards, 2015

WWW.AFRICAOUTLOOKMAG.COM

7

S T A N L I B

F A H A R I

I - R E I T

TYSONS LIMITED

T

ysons Ltd are the independent property valuers for the STANLIB Fahari I-REIT, having been established since 1923.

With our head office in Nairobi and branches in Mombasa, Nyeri and Kisumu, we offer real estate consultancy services in Kenya and throughout the East African region.

OUR VISION To be the preferred valuation and real estate solutions provider.

OUR MISSION STATEMENT To provide asset valuation and real estate solutions that meet global standards and constantly satisfy customer requirements.

T +254 20 2222011/310660 E info@tysons.co.ke

www.tysons.co.ke AfO: How much of a local focus is there in regards to STANLIB Kenya’s employment and supply chain management strategies?

AB: At STANLIB Kenya, we have a full complement of local staff while leveraging our strength in local expertise to navigate the local landscape and draw from the deep experience of our networks.

The synergies obtained from such ventures bring out the best investment solutions for our target markets.

For example, The Capital Markets Authority was pivotal in coordinating the involvement of different stakeholders in the process which led to the promulgation of enabling legislation.

We would like to thank all our suppliers and advisors for their contributions towards the formation of the I-REIT and the success of the IPO, as well as all our STANLIB colleagues.

8

WWW.AFRICAOUTLOOKMAG.COM

10 African countries “We have an operational footprint across 10 African countries, and will consider opportunities where they make sense for our customers. As we expand our businesses across Africa, we aim to focus on alternative assets and transactions that yield real benefits to our customers and other stakeholders”

STANLIB Kenya also actively participates in CSR (corporate social responsibility) activities. We have a very active CSR committee which steers the annual activities that the STANLIB staff members participate in.

AfO: Looking forward, if we were to speak again in three-five years’ time, what progress and development would you hope to see in the Kenyan listed property market?

AB: We would like to see the successful listing of several other I-REITs and D-REITs. This will provide investors with investment choice, as well as comparable performance data for the listed property sector.

In addition, REITs provide price disclosure in terms of buying and selling prices of their assets, and as more REITs are listed, it is anticipated that the market will benefit from greater trading activity in real estate assets, and the universe of publicly available data will grow.

C

O

N

S

T

R

U

C

T

I

O

N

Your Link to All Property Solutions.

JUBILEE INSURANCE CENTRE

> Registered Valuers > Estate Agents > Managing Agents

1ST FLOOR WABERA STREET 1) Valuation of Land, Buildings, Plant, P.O. BOX 40228 - 00100 NAIROBI Machinery and Fittings TEL: +254 20 2222011/310660 CELL: +254 722 207403/734222002 2) Property Management EMAIL: info@tysons.co.ke 3) Residential Property Sales and Letting 4) Commercial Property Sales and Letting 5) Project Management 6) Real Estate Consultancy and Feasibility Studies www.tysons.co.ke

Tysons Ltd is proud to be associated with STANLIB KENYA LIMITED - the STANLIB Fahari I-REIT Promoter and Manager.

Think Business Investment Awards, 2015

Viva Africa Consulting LLP (VACL), a specialized legal and financial tax advisory firm, partnered with other top tier firms in Kenya to form a team that worked together towards delivering the first Real Estate Investment Trust (REIT) in Kenya. VACL’s key focus, being the tax advisor to the REIT, was to advice on all the aspects in the general REIT environment that had a tax implication on the REIT.

3rd Floor | Kiganjo House | Rose Avenue off Denis Pritt Road PO Box 50719 - 00200 | Nairobi T: +254 (20) 246 5567 +254 (20) 269 9936 F: +254 20 271 1016 info@vivaafricallp.com www.vivaafricallp.com

WWW.AFRICAOUTLOOKMAG.COM

9

STANLIB FAHARI I-REIT STANLIB Kenya, Liberty House 1st Floor Mamlaka Road, Nairobi, Kenya T: +254 711 076 111 | +254 020 3268508 E: customercare.kenya@stanlib.com

www.stanlib.com/kenya