Real Estate Investment Trusts in Kenya can simply be compared to buying shares in a real estate
investment firm. There is no ownership of the different properties but you enjoy the profits realized
annually from mostly rental property owned. Furthermore, similar to shares, you can sell off your shares
in the REITs to other people.
The greatest advantage of REITs is that they are a cheaper way to own real estate without having so
much money. Moreover, in Kenya, they are regulated by the Capital Markets Authority and Nairobi Stock
Exchange.
There are different types of REITs. Firstly, is the Development Real Estate Investment Trusts (D-
REITs). A D-REIT is a type of REIT in which investors pool their capital together for the purposes of
acquiring real estate with a view to undertaking development and construction projects and
associated activities.
Additionally, is Income Real Estate Investment Trust (I-REITs). An I-REIT is a type of REIT in which
the investors pool their capital for the purposes of acquiring long-term income-generating real
estate including housing, commercial, and other real estate.
There are benefits that come with investing through REITs. Firstly, there is an assurance of Long
Term Returns. Investors acquire competitive returns as their performance is based on the
performance underlying real estate assets in the REIT structure.
Secondly is assured liquidity value since REITs enable investors to easily buy and sell units in a trust
that has invested in real estate assets. Thirdly, there is a consistent Income Stream. Income REITs
are mandated by the law to distribute at least 80% of their net after-tax profits to their unit holders
as dividends. This can provide a stable and consistent form of income annually for unit holders.
With REITs, there is also a diverse provision of assets meaning an investor can wind up having a solid and
reliable investment portfolio.
Finally, REITs are exempt from income tax except for payment of withholding tax on interest income
and dividends. Equally, REITs are exempt from stamp duty, value-added tax, and capital gain tax in
some instances.
If you are looking to know more about real estate investment, we are here for you.