Rank: Elder Joined: 12/4/2009 Posts: 10,804 Location: NAIROBI
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VituVingiSana wrote:deadpoet wrote:Ericsson wrote:deadpoet wrote:Probably two possibilities:
1) They announce plans to delist - this may happen before or after they sell two buildings in the REIT portfolio. They may offer to buy out current shareholders at a given price, with or without providing the proceeds from the sale.
2) They sell the two buildings and add more properties from the ICEA portfolio, keeping the listing on the NSE.
I bought this stock at around 6 bob, so I got about a 10% yield, which isn't too bad. I may keep or sell at cost depending on the restructuring.
Possibility 1 is the most probable option. More properties from the ICEA portfolio is easier said than done. You are correct. However, there is the possibility of ICEA making some statement just to raise the price over the short/medium term (from 6 to 8, for example). A 'pump and dump' by another name - given that they bought a stake sometime last year. Also, I think the difficulty of moving properties to be the REIT would be the same whether the company is listed or not. Given the tax advantages of REITs, it is a safe bet that such addition has been discussed in the boardroom. The question is whether it is cheaper for the powers that be to bring small shareholders along for the ride - after all, there is a cost of buying existing shareholders out (though it definitely wouldn't be at NAV). ICEA/Ndegwas are no fools to pay the fake NAV as a buyout price  A delisting makes sense to allow for a restructuring that including adding more properties and then re-listing Fahari. The current portfolio is very small and very few would take shares, as currently priced, in exchange for a property. Kamau thinks his building is worth 200mn even if the Net Income is just 8mn. That's the reality in Nairobi. The true value on an income basis may be 80mn (10x NI). He will not accept 10mn shares of Fahari (NAV 20) since they trade at 6/-. So how does Fahari get new properties unless it pays cash? How does it raise cash? Who will subscribe to a Rights Issue? What will the price of the Rights be? The Ndegwa family stated from Fahari I-REIT properties they want to keep Greenspan Mall and the Lavington property. The others have been marked for disposal Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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