Fusion Capital recently launched the first D-REIT in Kenya looking to raise KES2.3billion for the development of Greenwood city, a mixed use development in Meru County, Kenya.
The selling period for the Fusion Real Estate Development (FRED) initial public offer came to a close on Wednesday this week, having achieved 38 per cent subscription, which was 12 per cent below the minimum required threshold. Fusion is now looking to engage the Capital Markets Authority (CMA) and the Nairobi Securities Exchange on other future issues of REIT securities.
Fusion Capital is a private equity firm and real estate developer designed around the needs of local businesses in the emerging economies of Africa, having it’s presence in Kenya, Rwanda and Uganda.
“We will go on to fund this development privately. The project has been ongoing throughout the whole process and we continue to attract more investors taking up space at the mall and apartments. We believe D-REITS are key for the development of the Kenya REIT market, and we are keen to list a fully funded DREIT in the near future,” said Luke Kinoti, Fusion Capital Group Chief Executive.
“We will continue to offer education to ensure that investors are well equipped with the information on REITs in partnership with regulators,” said Mr. Kinoti, adding that the regulator has been highly supportive of the D-REIT all through.
“We look forward to seeing the D-REIT listed and trading at the exchange in the future. The NSE will continue to provide investor education on this new product and will involve key stakeholders including the Kenya Property Developers Association, fund managers, insurance companies, private equity firms amongst others,” said NSE Chief Executive, Geoffrey Odundo.
The project has continued in construction having achieved 35 per cent in construction and 25 per cent in letting of the shopping mall as well as 50 per cent sale of the apartments.
The development is located in the heart of Meru City and will remain a key feature of the city for many decades to come. Meru’s urbanization rate stands at 11 per cent and with a population growth of 15 per cent.
Fusion Capital is pursuing the county strategy having now invested in Nairobi, Meru, Nakuru, Mombasa, Machakos, Kajiado, Muranga and Kiambu counties. It intends to develop medium-size projects in these counties, mainly mixed use developments in the center of the towns.
The private equity firm has previously funded over 12 projects with funds from private investors who include both local and international investors. The company has successfully delivered several projects across the region, such as Kigali Heights, a USD37 million project in Rwanda set to open in September, and the same results expected for Greenwood City.