The Sh518 Million Safety Net Designed to Help Investors Exit a Property Fund

Two Rivers International Financial and Innovation Centre (Trific) and Nabo Capital have set aside Sh517.8 million to buy units from investors who want to exit its Sh4.8 billion dollar denominated Income Real Estate Investment Trust (I-REIT). The fund will act as a market maker, meaning that if an investor wants to sell their units but cannot find a buyer, the liquidity fund can step in and purchase them. The arrangement is designed to reduce illiquidity risk, a common concern in real estate investments in Kenya where selling assets can sometimes take time. The I-Reit is open to investors with a minimum investment of Sh129,463 ($1,000).

What does this mean for investors?
For investors, the biggest benefit is easier access to their money when they choose to exit. One of the main challenges of property backed investments is the fear of being unable to sell quickly without accepting a lower price. By creating a dedicated buyout fund, Trific is offering investors greater confidence that they can cash out when needed.

The move could also make the I-REIT more attractive to retail investors, who often prefer investments that offer both higher returns and a clear exit route. The I-REIT is targeting a net dividend yield of 8% per year in US dollars (about 8.4% on a pre tax basis), with a total return target of 10% when capital appreciation is included. In simple terms, the fund acts as a safety net that improves liquidity and reduces the risk of small investors mostly getting stuck holding units they cannot easily sell.