From Land Scams to Secure Investments: How REITs Like Acorn’s Are Protecting Kenyans from Real Estate Heartbreak

Hundreds of Kenyans who bought land and houses in Ruiru are having sleepless nights after the High Court ruled that their title deeds are, at best, worthless pieces of paper. Kenyans who pumped billions, sourced from loans and hard-earned savings, into land and lavish houses at the defunct Ruiru Kangaita Coffee Estate are now in distress. On July 10, Justice Oguttu Mboya ruled that the sale of the land was illegal, null, and void.

This is not the first time that Kenyans who had hoped to own property have seen their dreams turn into nightmares. Willstone Homes, Banda Homes, Mahiga Homes, Cytonn, and Suraya are names that give Kenyan investors sleepless nights. The worst was the Syokimau house demolitions of 2011 that wiped out the wealth of thousands of Kenyans, leaving a painful scar in our history.

Press ink has run red with these and other stories on how Kenyans have lost billions in investments. Even as these investors wait for justice to prevail and the blame game baton keeps getting switched between the Lands ministry and county officials, the question that always comes up is are there laws that can prevent this?

The answer is yes, and one of the ways investors can better protect themselves is to invest in assets that are regulated, such as Real Estate Investment Trusts (REITs).

REITs are regulated by the Capital Markets (Real Estate Investment Trusts) Regulations, 2013, which have put in place mechanisms to safeguard investors’ funds. For example, the Acorn Student Accommodation (ASA) investor and development REITs have safeguards in place ensuring that investors’ hard-earned money is protected.

First, the REITs have a reputable trustee. This is important.

The Trustee is critically important as the independent custodian and oversight body for the REITs. The Trustee’s main role is to ensure the assets are safeguarded and the REIT is managed strictly in the best interest of the unitholders or shareholders/investors.

In Acorn’s case, the developer and managers behind the Qwetu and Qejani student residences, which are housed in REITs, have the Co-operative Bank of Kenya as their Trustee.

One of the Co-operative Bank’s key roles is asset confirmation, ensuring in particular that the title is “clean.” Additionally, by holding the assets, the Trustee acts as an essential check against the REIT Manager, in this case, Acorn, ensuring the assets are properly owned and protected on behalf of the investors.

Also, in every REIT, the Trustee acts as an independent guardian, ensuring the REIT Manager operates within the law and follows all scheme and regulatory requirements. By verifying compliance with the Capital Markets Act and REIT Regulations, the Trustee adds an essential layer of governance that protects investors and promotes transparency.

The Trustee also reviews and certifies the REIT’s financial statements, confirming they present a true and fair view of its performance and financial position. This independent verification, required under the Capital Markets Regulations, assures investors that the REIT’s finances are accurate and responsibly managed.

REITs, regulated by the CMA, therefore ensure that investors, such as those buying into REITs through platforms like Vuka, avoid the land scams that have bedeviled the real estate investing industry.

Vuka is Kenya’s first regulated investment platform that gives retail investors the opportunity to invest in the ASA I-REIT, effectively allowing them to own a stake in Qwetu and Qejani student residences—in essence, becoming landlords.

For more details: https://vuka.co.ke/

Read Also: Are REITs A Smarter Way to Invest in Real Estate In Kenya?