The conversion and redemption offer by ILAM Fahari REIT which seeks to redeem up to 36.5 million units on the Nairobi Securities Exchange (NSE) as part of an operational restructuring effort opens tomorrow.

This after Fahari’s manager, ICEA Lion Asset Management moved to buy out nonprofessional investors also known as non-sophisticated—those holding units valued at less than Sh5 million.

ICEA Lion Asset Management Chief Executive Officer Einstein Kihanda said yesterday during a media workshop that the proposed Sh402 million-month long offer will close on October 6.

Redeeming units option

The deal entails redeeming applications from non-professional investors wishing to redeem up to 36,585,134 units currently listed at the NSE, at a more than 82 per cent premium over the current trading price as at the announcement date.

“The target unit holders will have an opportunity to either redeem their units at a Redemption Offer Price of Sh11 per unit, top up to the Sh5 million professional investors threshold as prescribed by regulatory provisions, or opt to be bundled under a nominee account holding all non-professional investors who fail to take up the redemption offer,” Kihanda said.

This transaction, according to him, provides a viable path to restructure this popular REIT without the price volatility experienced on the NSE.

ILAM Fahari I-REIT CEO Raphael Mwito said alongside the operational restructuring, the firm has continued to perform strategic and operational functions in managing the property portfolio and cash reserves to ensure effective long-term management of the REIT, deliver attractive investor returns and ensure compliance with regulatory and legislative requirements.

“Our active management approach targets quality properties within carefully chosen economically growing nodes,” Mwito said.

Last year, ILAM Fahari I-REIT’s distributable earnings increased by 39 per cent to Sh141.9 million compared to Sh102 million the previous year.

ILAM has been working for the past year to restructure the REIT to ensure its sustainability and improve its ability to generate returns for unit holders. A recent strategy review recommended undertaking an operational restructuring plan, which paved the way for this transaction.

The REIT recently received regulatory approval from the Capital Markets Authority to convert its unrestricted ILAM Fahari Income Real Estate Investment Trust (IFIR) into a restricted I-REIT.

IFIR will remain regulated by the CMA and is registered as a REIT with the Kenya Revenue Authority, thus continuing to enjoy statutory tax advantages.Fraudulent amendments

“Instances of fraudulent amendments to client account information have increased significantly, leading to substantial losses for Investors and potential sanctions to the CDA. It is also a source of significant reputational damage for the market,” said CDSC acting chief executive Jesse Kagoma in a statement.

Last month, a man impersonating various registered shareholders was charged in court with attempting to defraud investors and their respective stockbrokers of shares worth Sh3 million.

Patrick Musau Munguti was charged with stealing and fraudulently selling shares of KCB, Equity Bank, Standard Chartered, Bamburi Cement, Absa, Co-operative Bank, Nation Media Group, Centum and Kengen at stockbroker SBG Securities.

To address these pressing concerns, all CDAs will now be mandated to enforce a set of safeguards with immediate effect.

New regulations

Key highlights of the CDSC’s new regulations include the use of Integrated Population Registration System (IPRS) Verification.

“Brokers dealing with retail investors are strongly urged to implement the Integrated Population Registration System for thorough identity verification during account opening and any subsequent changes,” said the regulator.

Brokers are also prohibited from initiating any amendment requests in the Central Depository System (CDS) before establishing the request’s authenticity.

Dealers must rigorously evaluate and verify the accuracy, thorough verification process serves as an additional layer of security to thwart unauthorized amendments.

Instructions related to account alterations will only be acted upon if they are received through registered telephone numbers or email addresses associated with the CDS account. Any use of alternative contact information necessitates in-person verification to prevent unauthorized access.

By implementing these comprehensive measures, the CDSC aims to restore investor confidence in the financial markets and protect them from the growing threat of fraudulent activities.

Moreover, the stringent regulations are anticipated to safeguard the reputation of the market itself, ensuring its continued stability and credibility. As investors and market participants adapt to the new protocols, a more secure and resilient financial landscape is poised to emerge.