Real problems in real estate

Listed real estate companies are doing badly at the bourse led by Home Africa whose value has plummeted 93 percent.

Both Stanlib Fahari I-REIT and Home Afrika closed the first half of 2018 with lower share prices than their initial listing value.

Home Afrika’s share price closed June at Sh0.90, which was lower than its initial listing price of Sh12.00.

Listed property fund Stanlib Fahari I-REIT’s share price closed June at Sh11.00, which was 45 percent lower than the initial listing price of Sh 20.00

According to Knight Frank, it only appreciated slightly on news of sharing profits and acquiring new property.

Fahari I-REIT’s unit price remained stable until April when it rose to Sh11.95 following the announcement of a Sh0.75 per share distribution of profit and the planned acquisition of the additional property.

Listed property fund Stanlib Fahari I-REIT acquired 67 Gitanga Place, a commercial office development in Lavington, at a cost of Sh850 million, raising its real estate assets from 67 percent to 90 percent of the portfolio.

This is in compliance with the Capital Markets Authority (CMA) regulations that require the fund to allocate at least 75 percent of its net assets to an income-generating real estate. It expects to earn Sh73.8 million from the recently acquired building with an annual yield of 8.59 percent.

China Communication Construction Company Limited is currently the sole tenant on the property.

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