Africa Logistics Properties’ Dollar REIT Marks a Turning Point for East Africa’s Capital Markets

The approval to list East Africa’s first U.S. dollar–denominated industrial real estate investment trust (REIT) in Nairobi represents a quiet but profound milestone for Kenya’s capital markets. At its centre is Africa Logistics Properties Holdings Limited, an industrial and logistics real estate developer founded by British-born entrepreneur Toby Selman.

With regulatory clearance secured, the company is preparing to introduce a new investment vehicle that does more than expand the range of listed securities on the Nairobi Securities Exchange (NSE). The proposed listing signals a broader evolution in how capital is mobilised, how real estate assets are monetised, and how foreign and domestic investors access income-generating property in East Africa.

For a market that has long been dominated by shilling-denominated equities and bonds, the arrival of a dollar-based industrial REIT reflects changing investor preferences, growing institutional sophistication, and a deeper integration of Kenya’s financial system into global capital flows.

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Why a Dollar-Denominated REIT Matters

Real estate investment trusts have existed in Kenya for several years, but their adoption has been uneven. Challenges ranging from market education to liquidity constraints have limited their scale. The introduction of a U.S. dollar–denominated REIT, however, changes the equation.

Dollar-based instruments appeal strongly to institutional and foreign investors seeking predictable income streams insulated from currency volatility. In an environment where exchange-rate risk remains a persistent concern, especially for long-term investments, dollar-denominated assets offer a hedge that shilling-based securities cannot.

By structuring the trust in U.S. dollars, Africa Logistics Properties is effectively aligning East Africa’s industrial real estate sector with global capital market norms. This approach widens the pool of potential investors and positions Nairobi as a credible hub for sophisticated real estate finance.

Regulatory Approval and Market Readiness

The regulatory approval granted to Africa Logistics Properties did not come lightly. Kenya’s capital markets framework requires REITs to meet strict governance, disclosure, and income distribution standards. Central to these requirements is the rule that at least 80 percent of a REIT’s distributable income must be paid out to unit holders.

This threshold, which mirrors global best practice, ensures that REITs function primarily as income vehicles rather than speculative growth plays. For investors, the rule provides clarity: returns are expected to come mainly from regular distributions backed by rental income, not capital gains.

The proposed industrial REIT meets this criterion, aligning it with income-focused REIT standards in more mature markets such as the United States, Europe, and parts of Asia.

Sustainable Finance and Climate Positioning

Beyond compliance, the trust has also been admitted to the NSE’s Sustainable Finance Centre of Excellence. This designation reflects its positioning as a climate-conscious investment vehicle, supported by FSD Kenya.

Sustainability considerations are becoming increasingly important in real estate investment decisions. Energy-efficient buildings, optimised logistics layouts, and reduced environmental footprints are no longer optional extras—they are central to asset valuation and tenant demand.

By embedding sustainability principles into the trust’s structure and asset base, Africa Logistics Properties is signalling its intention to future-proof its portfolio. This positioning is particularly relevant for multinational tenants and institutional investors that operate under environmental, social, and governance (ESG) mandates.

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Structure of the Proposed Offering

The proposed REIT will comprise up to 45 million units, each priced at $1. Of these, 30 million units will be offered under a restricted offer, with a green shoe option allowing for the issuance of an additional 9 million units if demand proves strong.

This structure reflects a careful balance between market appetite and capital discipline. Rather than flooding the market with an oversized issuance, the developer has opted for a measured approach that allows flexibility while maintaining price stability.

Africa Logistics Properties will seed the trust by transferring completed, income-generating assets into the REIT in exchange for units. In doing so, the company will retain a minimum 20 percent stake as a promoter, ensuring alignment between the sponsor and incoming investors.

Seeding Assets and Alignment of Interests

The decision to seed the REIT with completed assets is critical. Investors are not being asked to fund speculative developments or construction risk. Instead, they are buying into a stabilised portfolio with established tenants and predictable cash flows.

Retaining a minimum 20 percent stake also sends a strong signal. It demonstrates confidence in the underlying assets and ensures that the developer remains financially exposed to the performance of the trust. This alignment of interests is a key factor in building investor trust, particularly in markets where REITs are still gaining acceptance.

Africa Logistics Properties’ Track Record in Kenya

Africa Logistics Properties entered the Kenyan market in 2016, well before logistics and industrial real estate became a mainstream investment theme in East Africa. Since then, the company has developed more than 70,000 square metres of modern logistics and light industrial space.

Its portfolio includes facilities in Tatu City and Tilisi, two master-planned developments that have become magnets for manufacturers, retailers, and regional distributors.

These locations offer proximity to major transport corridors, reliable infrastructure, and integrated planning—factors that are increasingly important for tenants seeking efficiency and scalability.

Why Logistics Real Estate Is Gaining Prominence

The rise of logistics and industrial real estate in East Africa reflects structural shifts in the economy. Growth in manufacturing, regional trade, and consumer demand has increased the need for modern warehousing and distribution facilities.

E-commerce, regional supply chains, and just-in-time inventory models all rely on efficient logistics infrastructure. Yet historically, much of East Africa’s industrial stock has been outdated, fragmented, or poorly located.

Developers like Africa Logistics Properties have sought to fill this gap by delivering purpose-built facilities that meet international standards. The proposed REIT provides a mechanism to scale this model by unlocking long-term capital from investors.

Capital Recycling and Growth Strategy

For Africa Logistics Properties, the REIT listing is not simply a financing exercise—it is a strategic pivot. By transferring stabilised assets into the trust, the company can recycle capital into new developments without over-leveraging its balance sheet.

This model allows the developer to:

• De-risk completed projects
• Free up capital for new investments
• Maintain exposure through a retained stake
• Expand its footprint across East Africa

In effect, the REIT becomes both a capital recycling tool and a growth platform.

Implications for the Nairobi Securities Exchange

For the NSE, the listing represents a meaningful addition to market depth and diversity. The exchange has long sought to attract new asset classes that appeal to institutional and foreign investors. A dollar-denominated industrial REIT ticks several strategic boxes.

It introduces:

• A new income-focused instrument
• Dollar-based exposure without offshore listing
• A sustainability-aligned product
• Greater sectoral diversification

These attributes enhance Nairobi’s competitiveness as a regional financial centre.

A Signal to Foreign Investors

The approval of the REIT sends a broader signal to international investors: Kenya’s capital markets are capable of supporting sophisticated, globally aligned products. Regulatory clarity, institutional support, and market infrastructure have reached a level where complex structures can be executed domestically.

For foreign investors already active in African real estate, the listing offers a more liquid and transparent entry point. Instead of direct property ownership, investors can gain exposure through listed units governed by clear rules and disclosure standards.

Risk Considerations and Market Discipline

Despite its promise, the REIT structure is not without risks. Currency dynamics, tenant concentration, and macroeconomic conditions will all influence performance. While dollar denomination reduces currency risk for investors, it does not eliminate exposure to regional economic cycles.

Additionally, liquidity in the secondary market will be critical. For the REIT to succeed over the long term, it must attract sufficient trading activity to allow investors to enter and exit positions efficiently.

These considerations underscore the importance of disciplined asset selection, transparent reporting, and active investor engagement.

The Broader Context: Kenya’s Evolving REIT Market

Kenya’s REIT market has faced challenges since its inception, including low uptake and limited public understanding. However, recent years have seen renewed efforts to revitalise the sector through regulatory refinements, market education, and product innovation.

The introduction of a dollar-denominated industrial REIT represents a departure from earlier models that focused primarily on retail and residential assets. It reflects a recognition that institutional investors often prefer income-producing, operationally essential real estate.

Sustainability as a Differentiator

The trust’s admission to the Sustainable Finance Centre of Excellence also highlights a broader trend: sustainability is becoming a differentiator rather than a niche consideration.

Industrial real estate, once viewed as environmentally neutral at best, is increasingly scrutinised for energy use, emissions, and land efficiency. Developers that incorporate green design principles are better positioned to attract premium tenants and long-term capital.

By aligning with sustainability frameworks from the outset, Africa Logistics Properties is positioning its REIT for long-term relevance.

Looking Ahead: What Success Would Look Like

Success for the REIT will be measured not only by the initial subscription but by its long-term performance. Key indicators will include:

• Consistent income distributions
• Stable occupancy rates
• Asset value growth
• Secondary market liquidity
• Expansion through additional asset injections

If these elements align, the REIT could serve as a template for future listings, both in Kenya and across the region.

A Defining Moment for Industrial Real Estate Finance

The regulatory approval of East Africa’s first dollar-denominated industrial REIT marks a defining moment for Kenya’s capital markets and real estate sector. It reflects the maturation of both the developer ecosystem and the regulatory framework supporting it.

For investors, it offers a new way to access income-generating assets in a growing market. For Africa Logistics Properties, it provides a scalable platform to support regional expansion. And for the NSE, it reinforces Nairobi’s role as a gateway for sophisticated financial products in East Africa.

As capital markets evolve and investor expectations rise, such innovations will play a critical role in shaping the future of real estate finance across the continent.

photo source: Google

By: Elsie Njenga

20th January, 2026