Cytonn Investments has filed an application with the Capital Markets Authority (CMA) to register a Development Real Estate Investment Trust, (DREIT), seeking to raise Ksh2.0 billion(US$19.3million) of capital.
The DREIT, which is innovatively structured to pay a coupon over the life of the development, will be deployed for the first phases of two of the firm’s real estate projects, The Ridge in Ridgeways, and RiverRun Estates in Ruiru.
This capital raise is envisioned to help Cytonn diversify funding sources for their real estate development pipeline, which has a project value of over Ksh82.0 billion (US$269.9million).
The leading alternative investment management firm in the East African Region (Cytonn) has traditionally relied on private sector funding, which while easier to access, has been more expensive.
This has thus necessitated the development of alternative sources of funding, allowing development of institutional-grade real estate at a relatively lower cost, thus maximizing the returns to investors.
Following the acquisition of financing for bank debt for The Alma from SBM Bank, Cytonn is now pursuing regulated DREIT funding.
Addition to diversifying for real estate, if approved the offer would also bring access to high-yielding investments to investors in the regulated markets.
With the transition to regulation through Cytonn Asset Managers Ltd, regulated by the Capital Markets Authority(CMA) and the Retirement Benefits Authority(RBA), Cytonn is now inclined toward bringing access to high-yielding alternative investments to the regulated markets.
“If successful, the funds will be deployed to towards the development of phase one of The Ridge and Phase 1 of RiverRun Estates,” said Bryan Gitia, Real Estate Investment Analyst at Cytonn.
The Ridge is a comprehensive aspirational lifestyle development on 10 acres in Ridgeways where stage one of the development is complete – including land acquisition, concept, foundation and is 50 per cent presold; funds will go towards the second stage of super structures construction.
RiverRun on the other hand is a master planned mixed used community on 100 acres in Ruiru, with a dedicated affordable housing component.
“The capital raise is in line with Cytonn’s strategy, through which landowners connect with institutional capital and development capability onto one platform. This strategy creates jobs, grows the economy and improves the standards of living in Kenya,” Gitia added.
The offering is being advised by Standard Investment Bank with KN Law LLP and the legal advisors. Baker Tilly Merali’s are the reporting accountants, Housing Finance (the Trustee) and Cytonn Asset Managers Ltd as the REIT Manager.
Cytonn Investments Management Plc (Cytonn Investments) is an alternative investment manager, with real estate development capability, and a primary focus on real estate investments in the high-growth Kenyan Region.
Cytonn Real Estate is Cytonn’s development affiliate, which is focused on developing institutional grade real estate targeted at specific institutional, high net-worth and Diaspora investors.
Collectively, Cytonn Investments and Cytonn Real Estate manage over $269.9 million of real estate projects.