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Depressed market dims NSSF’s plan to sell Hazina Plaza

By Wainaina Wambu | March 2nd 2020
By Wainaina Wambu | March 2nd 2020
Dr. Anthony Omerikwa CEO Managing Trustee National Social Security Fund (NSSF) [Wilberforce Okwiri/Standard]

The National Social Security Fund (NSSF) is hoping to earn Sh560 million from the sale of one of its prime properties in Mombasa County.

However, real estate experts warn it would be one of the hardest sells ever.

The fund last week invited offers for the 10-storey Hazina Plaza in Mombasa City, with an estimated rental income of Sh69 million a year. However, real estate agents warn the property could end up a “distress sale” owing to a lack of buyers.

NSSF Chief Executive Anthony Omerikwa (pictured) said the building, which sits on 0.32 acres, had offered returns that are “below target”, informing the decision to sell it.

He said a successful sale would see the proceeds re-invested in alternative “high-yielding investments” that he did not disclose, but added all non-profitable properties would be sold.

“In line with the fund’s property portfolio re-balancing, a decision to exit the low-yielding property by way of sale” was arrived at, with plans to “reinvest the funds into alternative higher-yielding investments”.

Hard sell

The State-run pension scheme bought the building in 1994 at Sh450 million. Experts, however, differed on its valuation after the property gained only Sh130 million in 26 years. NSSF valuers had initially put it at Sh530 million.

Knight Frank Managing Director Ben Woodhams said the valuation “all sounds above board and sensible to me”.

But Himaya Heights Investment Chief Executive Kimani Thambo, who is based in Mombasa, said the building would be a hard sell, and equated its disposal to “finding an antelope in the Indian Ocean”.

“It might have achieved its value from when it was bought, but it is valueless now. It has been tested and failed,” said Mr Thambo.

He further observed that despite its strategic location, a combination of factors means it would take over a year to sell.

In his estimation, the more likely prospective buyers are international investors or educational institutions.

Thambo noted that the directive to transport goods from Mombasa via rail had heavily impacted businesses in the county, including property.

“Mombasa is no longer the business hub it used to be and there’s no light at the end of the tunnel,” he said.

He advised prospective buyers to go for low-end property due to hurdles in their disposal.

Pension schemes have also begun disposing of properties to comply with investment guidelines set by the Retirement Benefits Authority (RBA).

However, this is proving difficult owing to a distressed property market. NSSF has more than Sh30 billion worth of properties.

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