News Column

UAP eyes Sh1bn rent from real estate investments

February 23, 2014


The financial services firm UAP Holdings is targeting to grow its rental income four-fold to beyond Sh1 billion mid-next year when the firm's mega-real estate projects will be completed.

The firm is banking on its ongoing real estate projects in Kenya, Uganda, South Sudan and Rwanda to boost rental earnings which raked in Sh219 million in the year ended December 2012.

It is constructing office complexes in Juba and Nairobi and is now letting its commercial property in Kampala.

The move to invest in property is part of a strategy to diversify revenue streams and cut reliance on earnings from the volatile stock market.

"We are aiming at more than Sh1 billion rental incomes once all our properties are complete and fully occupied," said Jackson Theuri, UAP's group chief financial officer.

"This will also help reduce exposure to equities."

UAP's property assets stood Sh8.8 billion in June while investments in equities and government were worth Sh4.3 billion and Sh3.6 billion respectively. But equities have been generating more profits compared to other assets classes.

READ: UAP to reveal Nairobi bourse listing plans next month

UAP is targeting to complete construction of Equatorial Towers, a 15-storey office building located in Juba, by August. The Sh1.7 billion building will be the tallest commercial building is South Sudan's capita.

The Juba office complex is a joint venture between UAP Insurance Sudan and Central Equatorial Investment Corporation. The corporation is the investment arm of Central Equatorial State in South Sudan.

The firm is also constructing UAP Tower —a 31 storey office complex in Nairobi's Upper Hill district —which is due mid next year.

In August, it completed the UAP Nakawa Business Park in Kampala and is now letting the eight-storey office park. Its 15 two- bedroom high rise apartments in Juba was done last year and is now fully occupied.

The construction sector has been one of Kenya's fastest growing sectors over the last decade, and its returns have outpaced those of equities and government securities.

This has seen the sector attract high net worth investors, especially investment firms like Centum, CIC Insurance and Britam, seeking to tap Kenya's burgeoning middle class with growing disposable incomes.

UAP last year acquired 3.3 acres of prime land in Kigali and is now conducting a feasibility study on the kind of development to be put up at the site.

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Source: Business Daily (Kenya)

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