After successful restructuring, ILAM Fahari Real Estate Investment Trust has been admitted to the Unquoted Securities Platform (USP) of the Nairobi Securities Exchange Plc (NSE).

In February, ILAM received regulatory approval from the Capital Markets Authority (CMA) to delist the REIT from the Main Investment Market Segment (MIMS) of the Nairobi bourse in a restructuring that involved turning from an unrestricted to a restricted I-REIT.

Delisting from MIMS and trading over the counter on the USP will provide greater flexibility in managing the REIT's portfolio and will not affect the unitholders' ability to trade their units, with Non-Professional investors (investors whose unit value is less than Kes5 million) bundled into a Nominee Account.

Speaking during the bell-ringing event to mark the REIT's admission to the USP, ILAM CEO Einstein Kihanda expressed confidence in the REIT's ability to thrive. He said the move will enable the company to unlock the REIT’s full growth potential, reduce costs, attract new investment, and acquire additional properties to reach a sustainable asset base size.

“We are upbeat about the potential of the REIT following its listing at the USP. This move provides us with increased flexibility and potential for growth. The new structure aligns with ILAM Fahari’s strategic vision to optimize its investments and provide investors with innovative avenues to diversify their portfolio,” Mr. Kihanda said.

Challenges the I-REIT faced

The decision to convert and restructure stems from the ILAM Fahari I-REIT’s comprehensive strategic review in 2021, which sought to understand the challenges the I-REIT faced and develop potential strategies to improve the returns and market performance. The long-term plan will elevate returns and market performance through asset optimization and the growth of Assets Under Management (AUM).

Upon successful implementation of the strategy, the REIT will consider relisting on the NSE after three years. Under this new segment, ILAM Fahari I-REIT will remain regulated by the Capital Markets Authority.

“The unquoted securities platform plays a crucial role in our capital markets ecosystem by providing a gateway for innovative financial instruments. It promotes inclusivity, allowing a diverse range of issuers to access capital and enabling investors to participate in emerging sectors of our economy. ILAM Fahari I-REIT's presence on this platform exemplifies the platform's role in fostering growth and unlocking value in Kenya's real estate market,” Capital Markets Authority Chief Executive Officer Wycliffe Shamiah said.

Reiterating his remarks, the NSE Chief Executive Officer Mr. Frank Mwiti noted, “The admission of the ILAM Fahari I-REIT is a testament of the commitment by the leadership of the REIT to put the needs of their unit holders at the core of their operations and a demonstration of their dedication to ensuring unit holders enjoy maximum value from their investment in the form of capital protection, appreciation and dividends.

“The admission is also a strategic move aimed at ensuring that the REIT is well positioned to take advantage of future growth opportunities.” 

Read also: ILAM Fahari I-REIT unitholders give thumbs up to delisting

Benefits for unitholders

ILAM will seek high-quality assets in prime locations with strong tenants and aims to double its portfolio value from Kes3.5 billion to Kes7 billion within the next three years.

The restructuring is expected to create several benefits for unitholders, including increased flexibility to pursue a broader range of investment opportunities, including direct real estate acquisitions and developments, improved ability to align the REIT's investment strategy with the long-term needs of its unitholders, and reduced costs and administrative burdens associated with being a listed REIT.

"There is a need to create opportunities for Africa's growing youthful population to earn money, and the Unquoted Securities Platform provides a viable option for our youth to invest in," FSD Africa Director, Capital Markets Development Dr.  Evans Osano said.

The ILAM Fahari I-REIT's concept is globally recognized. 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.