The final call: ILAM Fahari I-REIT redemption offer nears end

The ongoing redemption offer for the listed real estate investment trust, ILAM Fahari Real Estate Investment Trust (I-REIT), is set to conclude tomorrow, October 6th.

Addressing the redemption offer period, which paves the way for the conversion process, Einstein Kihanda, CEO of ICEA LION Asset Management (ILAM), noted that following the closure, trading of the ILAM Fahari I-REIT will be temporarily suspended at the Nairobi Securities Exchange (NSE).

This suspension will run from close of trading on Friday, October 6th, until Wednesday, October 25th, in line with the timetable outlined in the Conversion Offering Memorandum and the Public Notice dated August 29th, 2023.

Premium offer price

The offer, which started 30 days ago, aimed to redeem up to 36.5 million REIT units currently trading at the NSE from Non-Professional Investors at a redemption offer price of Kes11 per unit. Notably, the redemption offer price represents a premium of more than 82 percent above the trading price as of the announcement date.

Mr. Kihanda highlighted a positive market response to the conversion and redemption offer thus far. He encouraged all Non-Professional Investors who are considering redeeming their units to do so or top up to meet the Professional Investor threshold before the offer closes on Friday, October 6th, at 5:00 pm.

ICEA LION Asset Management (ILAM) is strategically repositioning ILAM Fahari I-REIT for growth, aligning with its initial vision when it went public in 2015. This move follows a  review conducted by ILAM in 2021, aimed at understanding the challenges faced by the I-REIT and developing strategies to enhance returns and market performance.

Raphael Mwito, CEO of ILAM Fahari I-REIT, highlighted the significance of the redemption offer within the ongoing operational restructuring plan. This plan is designed to ensure the REIT’s sustainability and its ability to generate returns for unitholders. It also presents an opportunity for unitholders with a unit value under Kes5 million to exit the REIT at a premium to the current market price.

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Non-Professional Investors

ILAM secured regulatory approval from the Capital Markets Authority (CMA) to convert its unrestricted ILAM Fahari Income Real Estate Investment Trust into a restricted I-REIT. As part of the offer, Non-Professional Investors have the option to top up to the Kshs5 million professional investors threshold as prescribed by regulatory provisions.

Alternatively, they can choose to be bundled under a nominee account holding all non-professional investors. The REIT Manager established the bundled nominee account seeking to accommodate Non-Professional Investors who may not wish to exit during the transaction period or opt for the redemption offer, allowing them to continue participating in the REIT’s growth.

Mr Mwito added, “The REIT Trustee will review all redemption applications, and the unitholders who have successfully redeemed their units will be paid on October 24th, 2023, after reconciliation of the transaction.”

ILAM Fahari I-REIT’s portfolio comprises four real estate properties: Greenspan Mall, Highway House, a three-storey industrial building off Mombasa Road, and 67 Gitanga Place.

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