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Recent Topicals

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Joint Venture Agreements (JVs) in Real Estate

May 19, 2024

Introduction Joint Ventures (JVs) can be defined as strategic arrangements between two or more businesses, where resources are pooled to work together on a project. Joint ventures are vital in bringing together businesses from different areas of expertise for business purposes. JVs can take many forms such as; i) limited liability company- in the case where the project will incur a lot of capital, the party may decide to form a new company for this purpose, mostly referred to as a ‘special purpose vehicle’. The new company will be a separate legal entity, ii) a partnership, and, iii) a contractual joint venture- two or more parties collaborate or share knowledge and expertise on an ongoing basis, here an agreement is well drafted. To put this into context, let’s say a company, Company A, has extensive expertise in Real Estate and has delivered many successful projects. Another company, Company B, owns a well-situated piece of...

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Nairobi Metropolitan Area Residential Report 2024

May 12, 2024

In 2023, we published the Nairobi Metropolitan Area Residential Report 2023 themed ‘Resilient Market with Steady Growth Potential’. This week, we update our previous research with the Nairobi Metropolitan Area (NMA) Residential Report 2024 titled ‘Untapped Investment Niches’ by highlighting the residential sector's performance in the region in terms of price appreciation, rental yields, and market uptake, based on the coverage of 35 regions within the Nairobi Metropolis. We shall also discuss factors influencing residential supply and demand, current developments affecting the industry, and conclude with a look at investment options as well as the sector's general outlook for the coming fiscal year. As such, we shall discuss the following; Overview of the Residential Sector, Recent Developments in the Sector,

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Unlocking Kenya’s Capital Markets

Apr 28, 2024

The Nairobi Securities Exchange (NSE) last recorded an Initial Public Offers (IPOs) in 2015, when Stanlib Investments issued an IPO of the first Real Estate Investment Trust (Fahari I-REIT) at the bourse, managing to raise Kshs 3.6 bn against the target of Kshs 12.5 bn, 28.8% success rate. This translates to an eight-year IPO drought, with the most recent activity at the bourse being the listing by introduction, meaning no money was raised) out of the Local Authority Pension Trust (LAPTRUST) Imara Income Real Estate Investment Trust (I-REIT) under the Restricted Sub-Segment in 2022. LAPTRUST holds 100.0% of the Imara I-REIT shares with no initial offer to the public. Currently, the bourse has 66 listed securities with a total market capitalization of Kshs 1.7 tn as at 25th April 2024. The bourse continues to be Safaricom-dominated, with Safaricom’s market capitalization of Kshs 653.1 bn equivalent to 39.1% of the entire market capitalization. Additionally, Safaricom (39.1%) an...

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Kenya Listed Banks FY’2023 Report

Apr 21, 2024

Following the release of the FY’2023 results by Kenyan banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that shaped the performance of the sector. For the earnings notes of the various banks, click the links below: Equity Group FY’2023 Earnings Note; KCB Group FY’2023 Earnings Note; Standard Chartered Bank Kenya FY’2023 Earnings Note; ABSA Bank Kenya FY’2023 Earnings Note;

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Kenya Mortgage Refinance Company (KMRC) Review 2024

Apr 14, 2024

The Kenya Mortgage Refinance Company (KMRC) is a non-deposit taking, public-private partnership (PPP) firm formed by the Government of Kenya and regulated by the Central Bank of Kenya (CBK). The primary mandate of KMRC is to ensure sustainable home financing in the country, by providing long-term funds to primary mortgage lenders (PMLs) such as; banks, microfinance institutions, and SACCOs at low and fixed interest rates. KMRC was incorporated in April 2018 under the Companies Act 2015, and authorized by the CBK to begin lending operations in September 2020. In 2023, KMRC had managed to disburse Kshs 8.4 bn As a wholesale financial institution, KMRC does not take deposits nor lend directly to individuals. This strategic approach allows KMRC to concentrate on enhancing liquidity for primary mortgage lenders (PMLs) and fostering standardized lending practices in collaboration with governmental bodies and other stakeholders. The primary aim is to empower mortgage lending instit...

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