36844 - STANLIB Fahari I-REIT

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Summary of Investment Information

Project Number

36844

Company Name

STANLIB KENYA LIMITED

Date SPI Disclosed

Oct 26, 2015

Country

Kenya

Region

Africa

Projected Board Date

Oct 12, 2015

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 30, 2016

Department

Regional Industry - MAS Africa

Industry

Tourism, Retail and Property

Previous Events

Approved : Nov 2, 2015
Signed : Nov 18, 2015
Invested : Dec 1, 2015

Sector

Other

Project Description

IFC investment of up to US$15 million-equivalent in STANLIB Fahari Property Income Fund Income Real Estate Investment Trust (“STANLIB Fahari I-REIT”), a US$125 million-equivalent I-REIT in Kenya which will be listed on the Nairobi Securities Exchange. The I-REIT will own and manage existing, income-generating real estate properties. STANLIB Fahari I-REIT will be the first I-REIT to list in Kenya following enactment of The Capital Markets (Real Estate Investment Trusts) (Collective Investments Schemes) Regulations, 2013. The listing of the I-REIT is subject to Kenyan regulatory approval.

Successful establishment of Real Estate Investment Trusts as a liquid financial instrument used to gain exposure to Kenyan real estate help unlock significant capital resources to fund Kenya’s real estate gaps.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	15.0

Development Impact

This project plays an essential role in market development by enabling local, long maturity, institutional investors to take positions in long maturity income producing real estate. This appropriately extends the tenor of domestic pension fund assets, and frees up developers'' capital so that they may focus on new development opportunities.

-Establishment of REITs as a credible financial instrument in Kenya will help reduce, entry barriers and risks otherwise associated with real estate investment by financial investors. This will be beneficial from a portfolio diversification standpoint for asset managers (including pension funds and insurance companies), and therefore enable all stakeholders of such firms (persons with pensions and/or ones obtaining various forms of risk mitigation) to benefit from further development of Kenya''s property markets

-Successful establishment of REITS in Kenya will provide new impetus to real estate building activity and this has significant employment generation as well as urban infrastructure development impact

-IFC''s investment will help validate REITs as a means for: (i) domestic investors to access investment opportunities in Kenya''s real estate sector; amd (ii) real estate developers to avail themselves of financial resources from local capital markets in order to expand their building activities

-IFC participation in the debut REIT issuance in Kenya will involve incorporation of IFC ESG best practices into the instrument, which will become a benchmark for subsequent REIT issuances by StanLib (and ideally the market as a whole) going forward

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-2 project according to IFC’s Environmental and Social Review Procedures. The Income Real Estate Investment Trust (I-REIT) will generate both income and capital growth through investing principally in eligible real estate assets directly or through vehicles (companies or trusts). The real estate portfolio will be predominantly existing commercial properties such as hotels, office buildings (and office parks), retail centres and warehouses. Residential property investments will form a small part of the real estate portfolio. A small element of development exposure will also be taken, as provided for by the REIT Regulations. The proposed investment is expected to have limited environmental and social impacts. Further, the impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria. Key environmental and social requirements applicable to this Project include: (i) compliance with national legislative requirements by obtaining relevant Environmental licenses and permits for the real estate; and (ii) screening of pipeline properties against relevant IFC Performance Standards and the World Bank Group EHS guidelines.

STANLIB Fahari I-REIT currently has no ESMS and is in process of developing an appropriately integrated Environmental and Social Management System (“ESMS”). The ESMS will include associated policies, plans, manuals and procedures and be consistent with IFC Performance Standards requirments. Specifically the ESMS will include E&S due diligence procedure for property acquisition which includes screening against the applicable National Laws of Kenya and the Performance Standards. Stanlib REIT is required to appoint an E&S officer for the Trust that will oversee the formulation of HSE policies for the properties and ensure the successful implementation of the ESMS. In addition, to mitigate Life and Fire Safety risks, will be required to appoint a qualified independent life and fire specialist to develop Life and Fire Safety Plan in accordance to IFC requirements and WBG EHS guidelines. STANLIB Fahari I-REIT will develop a stakeholder engagement plan and will establish a grievance mechanism to address concerns of local communities related to its operations.

Contacts

For Inquiries About the Project, Contact

Anton Borkum
CEO STANLIB Fahari REIT
Liberty House, Nyerere Road
P.O. Box 30550 – 0100, Nairobi, Kenya
Mobile: +254 – 713 780 833
E-mail: mailto:anton.borkum@stanlib.com

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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