REITs Regulation in Kenya (2024)

In any investment, it’s very important to do your own research especially on what the law and the regulator requires. On REITs, this is what the law says about them in Kenya:

• In 2013, the Capital Markets Authority- Kenya put in place a framework for the operationalization of Real Estate Investment Trusts (REITs) in Kenya. Kenya then became the 3rd nation in Africa to launch and adopt a regulatory framework promoting REITs as an investment vehicle.
• The REITs Manager, a registered company in Kenya, is responsible for actively monitoring the portfolio's performance, safeguarding investors' returns, and optimizing the portfolio's performance.
• Additionally, the regulations stipulate that Kenyan REITs are mandated to distribute a minimum of 80.0% of distributable earnings to their unitholders.
• Nairobi Securities Exchange PLC listed REITs are held to the same standards and requirements of disclosure to investors.
• Furthermore, any income that REITs distribute to their investors (unitholders) are not taxed. However, individuals who hold units in a REIT and decide to sell their ownership stake are obliged to pay Capital gains tax.
• The gain accrued by a Promoter or an investor on the transfer of property into the REIT is subject to Capital Gains Tax (CGT) at the newly adjusted rate of 15%.

A good example of REITS is the Acorn Students Accommodation REITs, which owns the Qwetu Students Hostels. Initially, investing in REITS was restricted to institutional investors due to a high threshold amount of up to Ksh 50 million.

Acorn Holdings Limited then introduced Vuka Investment Club - a digitally enabled product that allows you to invest in Acorn I-Reit conveniently and safely, to bridge this very gap, by allowing investors to own a piece of its Qwetu and Qejani apartments. This innovation opens doors for individuals to benefit from the advantages of REIT investing, including:

1. Steady income flow: Income REITs, in accordance with the law, must distribute a minimum of 80% of their net after-tax profits to their unit holders as dividends. This ensures a dependable and regular income for unit holders each year.
2. Long-term gains: REITs provide investors with competitive returns, as their performance is linked to the underlying real estate assets within the REIT structure.
3. Tax advantages: REITs are generally exempt from income tax, with the exception of withholding tax on interest income and dividends. Additionally, REITs may be exempt from stamp duty, value-added tax, and, in certain cases, capital gains tax.
4. Liquidity: Compared to directly owning real estate assets, REITs provide investors with improved liquidity. This allows investors to conveniently buy and sell units within a trust that has invested in real estate assets.
5. Diversification: When included alongside other asset classes, REITs offer a distinctive tool for diversification within an investment portfolio.

To become a REITs investor and access these benefits, you can consider investing in the Acorn’s Student Accommodation Income Real Estate Investment Trust (ASA I-REIT), and become a part-owner of Acorn’s brands. To get started, follow this link: https://bit.ly/InvestInVuka