Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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D&B Coverage: cont Quote:8. Will unit holders receive dividends going forward?
Given that the main source of income is net rental earnings from rentals from eligible real estate investments owned directly by the STANLIB Fahari I-REIT and dividend income from wholly-owned subsidiary companies that own eligible real estate investments, the steady stream of cash inflows guarantees investors of dividends going forward.
The minimum distribution shall be 80% of the profit after tax excluding unrealised fair value gains.
9. What are risks specific to the STANLIB’s Fahari I-REIT Structure?
Market Risk: This is the risk that prevailing market forces of demand and supply may negatively impact the REIT Scheme’s underlying asset values and its ability to attain the projected performance. The market values of the Seed Properties and other properties that the Scheme owns may be impacted by fluctuations in supply and demand for rental
properties in Kenya.
Income Risk: Reduction in reported rental income and operating profits may arise, for example, if tenancy agreements of the underlying properties are renewed at a lower rental rate than the previous agreement or if the occupancy rate falls that in turn,
reduces property income and STANLIB Fahari I-REIT’s ability to recover certain operating costs such as service charges.
10. Are there measures taken to facilitate steady cash flow stream going forward?
Various measures have been taken to mitigate income risk. These include: income flow management; lease audit and data integrity review; vacancy management and leasing strategy; review of lease structures; and cost optimisation management.
In particular, the leasing strategy will include procuring of payment upfront and contractual lock-ins of rental rates and other clauses in tenancy agreements as well as a 6 month non-renewable lease notice. Pesa Nane plans to be shilingi when he grows up.
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