Fahari I-Reit offer surpasses target by 13pc

Einstein Kihanda CEO ICEA Lion speaking during ICEA LION Asset Management Q1 Investor Pulse 2023. [Wilberforce Okwiri, Standard]

The redemption offer by ILAM Fahari Real Estate Investment Trust (Reit) has been oversubscribed by 13.08 per cent, paving the way for restructuring of the investment vehicle.

The Reit’s trustee said it had received applications for redemption of 41,371,604 units, which represented a subscription rate of 113.08 per cent.

The Reit, listed on the Nairobi Securities Exchange, also received applications for top-up additional units of 421,945 from non-professional investors.

ICEA LION Asset Management (ILAM) Chief Executive Einstein Kihanda said the offer had received redemption applications from non-professional investors wishing to redeem up to 36,585,134 units currently listed at the NSE, offered at a premium of more than 82 per cent over the trading price as at the offer announcement date.

He said they have been working to restructure the Reit to ensure its sustainability and improve its ability to generate returns for unitholders.

A recent strategic review recommended undertaking an operational restructuring plan, which paved the way for the offer.

“This transaction provides a viable path to restructure the Reit. We are clear that the REIT needs to grow substantially in size to achieve economies of scale, which can only be done by acquiring additional assets,” Kihanda said.

He said following the close of the offer period, ILAM, in consultation with the respective transaction advisers, has provided the offering results to the Capital Markets Authority.  

“With the positive outcome, we are now on course to complete the redemption process and proceed to the strategic restructuring of the ILAM Fahari I-Reit as we seek to position it for growth.

“This is part of our strategic growth plans to deliver positive returns for our investors while deepening the local capital markets.”

The Sh402 million offer opened on September 6 and closed on October 6, 2023, and sought to redeem 20.22 per cent of the issued shares of the Reit.