Cytonn did not pull out of the DREIT conversion, the regulator capriciously ended that process as the brand was looking for a REIT Trustee. He says Cytonn is ready, able, and willing to convert CHYS into a DREIT.
In the past few days, a lot of conversation about Cytonn Investments has been flying both online and offline. Tongues have been wagging, fires flaring with few willing to listen and understand how the product under discussion; Cytonn High Yield Fund, works.
A look at the sentiments flying behind the conversation and one will know that most of those talking about the subject have no idea what it is all about. Here are some of the questions that people are missing out on; what is a high yield fund? What is the investment portfolio? What is the interest rate? among others.
Despite the conversation happening about the brand and the product, one would have expected the regulator, the Capital Markets Authority (CMA) to come out and either explain the issue, set the record straight, or reach out to Cytonn to find out what the problem.
To the shock of many who understand the markets, CMA came out and made a statement that made matters worse, while placing Cytonn as an illegal entity. As a regulator, the press statement that was issued without a right of reply from Cytonn was misleading, castigating with no roots to anchor whatever was being raised.
“Someone reach out to CMA and ask them to take their issues with market participants behind closed doors, but if they must use press statements and press briefings, then at least put out the correct information, backed by documentary evidence,” said the seemingly furious CEO of Cytonn Mr. Edwin Dande.
According to Mr. Dande, Cytonn did not pull out of the DREIT conversion, the regulator capriciously ended that process as the brand was looking for a REIT Trustee. He says Cytonn is ready, able, and willing to convert CHYS into a DREIT.
“CHYS is properly a private offer, we have even submitted the issue for judicial interpretation, but for the sake of peace in the market and most importantly to protect investor interest, we are happy to convert it,” he said.
The CEO of the real estate giant says the regulator wants to characterize private offers as risky without giving any statistical evidence. The reality is that losses in products regulated by CMA have registered more defaults than privately offered products.
He gives an example of Imperial bank bond, chase bank bond, Amana Money Market fund, Uchumi, Mumias, CMC that were all regulated offers, yet the protected class of investors walked away with zeros.
“Let us not falsely elevate regulated offers above private offers without statistical evidence, they are both essential to the market. Private offers finance projects, employ people and grow the economy. They fund situations that banks or regulated capital may not venture into. The largest comprehensive lifestyle development in this country, #TheAlma has been financed by private offers,” added Mr. Dande.
The regulator has been threatening to involve the police. But Mr. Dande says “Bring it on.” “The issue of bringing in the police in almost every statement Mr. Shamiah makes about Cytonn appears carefully designed to, at best, intimidate management, but at worst, to cause panic amidst our investors. If Private Offers was indeed a police matter as he keeps reminding us, then; CMA would have called the police way back in 2016 when we engaged them on the product; But let us even assume they just realized recently that private offers are illegal, then call the police for ALL market participants, why just one?
So, what is the Cytonn High Yield Fund?
On Cytonn’s website, they have defined this product as a “Collective investment scheme that has a high allocation towards investment in real estates, which have consistently demonstrated the ability to deliver high returns than those from traditionally available assets.”
What is the Investment Portfolio for the Cytonn High Yield Fund?
An investment portfolio is basically where the investor’s money goes to. A portfolio should be diverse – invest in different things for security purposes in case of an abrupt shift in the economy at large, a pandemic as in the case of Covid-19.
For the Cytonn High Yield Fund, 80 percent of the investment is in real estate. Therefore, their main portfolio was/is in real estate.
Read More: The Cytonn Equation: What Lies In The Roots?