Residential property developer, Mi Vida Homes, is seeking approval from the Capital Markets Authority (CMA) to float a Development Real Estate Investment Trust (D-Reit) as it looks to raise Sh5 billion from domestic institutional investors to fund its construction pipeline of 3,500 housing units.
Reits are companies that either develop or own income-producing real estate. A D-Reit is a type of vehicle through which investors pool their capital together develop real estate projects.
If the CMA approves Mi Vida’s application, it will be the second D-Reit in the Kenyan market after the one floated by Acorn Student Accommodation in February 2021.
Mi Vida, which has relied on private equity capital to fund its construction of 840 units at Garden City and Riruta, says the capital raised from local institutional investors will provide it with the much-needed boost to play at a larger scale than it currently does.
The CMA early this month granted Mi Vida Homes Limited a permit to operate as a Reit Manager in a bid to deepen and develop the capital markets.
The company’s management expects the funding raised through the D-Reit will enable it to attract additional funding with an aggregate target of Sh20 billion.
The firm said Kenya’s real estate market is now ripe for disruption in funding sources and REITs provide a low-hanging fruit through which this can be done and enable developers to play at scale.
“We are in a very fragmented market. I don’t think any player including ourselves holds or controls even 0.1 percent of the market and this tells you there is an opportunity for institutional players to scale up and do above 5,000 or 10,000 units. So, our assessment is that the market opportunity is very significant targeting retail and institutional investors who can then hold property to rent out,” Mi Vida CEO, Sam Kariuki, told the Business Daily.
Kenya’s first D-REITs, two schemes issued by Fusion Capital Ltd, went to market in March 2015. The latest issuance of a REIT was an income REIT issued by Laptrust.
