Warehousing developer Africa Logistics Properties (ALP) has been spared a Sh228 million stamp duty charge after it moved its property into its recently listed real estate investment trust (Reit), riding on the provision of the Finance Act 2026, which exempted such transfers from the levy.

ALP listed Kenya's first dollar-denominated Income Real Estate Investment Trust (I-Reit) in March after bringing in new investors through a restricted offer that raised $34 million (Sh4.4 billion).

The company then initiated the transfer of three properties in Tatu City and Tilisi, valued at a combined Sh3.43 billion, into the Reit. It is in the process of transferring another Sh2.38 billion warehouse unit at Tatu City into the Reit.

Reits are a form of collective investment scheme in real estate that allows an investor to own an interest or rights in a property by buying units that earn returns from the income and capital gains generated by the property.

Firms issuing Reits are, therefore, required to seed the trusts by transferring or buying property from which the units to be sold to the public are derived.

Before the Finance Act, 2026, such property transfers into Reits were chargeable with a stamp duty of four percent. The Act has, however, reinstated an exemption that existed until 2022 – when it expired – after lobbying by real estate stakeholders.

“Accordingly, the properties will be transferred into ALP Reit without the application of stamp duty,” said ALP in a filing announcing the transfer.

Reits also remain exempted from other taxes, including corporate income tax, capital gains tax on certain types of property transfers and VAT.

Distributions to unit-holders are, however, not exempted from withholding tax, which is levied at five percent, as in the situation with other dividends.

The Nairobi Securities Exchange (NSE) features several Reits. The Acorn Development-Reit, Acorn I-Reit and ILAM Fahari I-Reit are listed on the unquoted securities platform, while the ALP Industrial Reit, Centum’s Trific green dollar I-Reit and Laptrust Imara I-Reit are listed on the main market segment.

Compared to equities and bonds, Reits are a relatively new investment class in the Kenyan capital markets, having had a maiden issuance in October 2015 through the Fahari I-Reit, which is now managed by ICEA Lion Asset Management.

The entry of the ALP Reit on March 11, 2026 marked the first instance of a dollar-denominated instrument being listed at the NSE, followed by the Trific green dollar I-Reit on June 29.

The Reits are, however, targeted at professional and institutional investors in Kenya, with a minimum investment threshold of Sh5 million, except the Trific Reit which allowed minimum investment lots of $1,000 (Sh129,000).

ALP’s filings show that it has 21 investors, who hold 10,000 to 10.2 million units each. The top four investors hold a combined 86.1 percent of the Reit’s 39.95 million issued units.

ALP and InfraCo Africa Investment Limited, a Western-funded Infrastructure fund, each hold 10.2 million units or 25.5 percent of the issued units.

United Kingdom government entity MOBILIST Programme and Jubilee Life Insurance Limited follow with holdings of nine and five million units respectively, giving them stakes of 22.5 percent and 12.5 percent.

The remaining units are distributed among 17 shareholders, the majority under nominee accounts.

The holding by the Reit manager ALP will, however, go up to 33.8 percent once it transfers the fourth property into the Reit in exchange for additional units.

ALP will be allocated an additional 4.99 million units in exchange for the Tatu City warehouse, taking its holding to 15.2 million units.

The total issued units will go up by a similar margin to 44.95 million units, from the current 39.95 million.

Statutory rules require the Reit promoter to hold a minimum of 20 percent of the issued units in year one of listing, and 10 percent for the second year, meaning that ALP’s holding is well above the required threshold.

→cmwaniki@ke.nationmedia.com

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