NSSF reveals valuation of iconic Nairobi office blocks

State-run pension scheme, the National Social Security Fund (NSSF), has offered a glimpse into the cost of office blocks after revealing the value of several iconic buildings it owns around Nairobi.

Top on the list is the NSSF Complex that is valued at Sh8.4 billion, comprising blocks A, B, C and a parking silo on Nairobi’s Bishop Road. The fund puts the value of Bruce House, which hosts its city centre branch, at Sh2.8 billion while the View Park Towers’ price tag is Sh2.5 billion.

Hazina Trade Centre, which formerly hosted Nakumatt Lifestyle, is valued at Sh3.1 billion, according to NSSF’s financial statements for the year ended June 2018.

Works to build an additional 36 floors on top of initially three-floor Hazina Trade Centre stalled in September 2014 after Nakumatt Supermarkets, the then anchor tenant, was granted court orders stopping construction of the tower.

The fund opted to scale down the upgrade to 15 floors.

Real estate has for long been seen as a safe investment bet, making it among popular cash-generating options for high-net worth investors like pension schemes in the Kenyan economy.

But falling cement sales and property auctions by mortgage lenders in recent months have pointed to widespread distress in the real estate sector.

NSSF has in the past announced plans to divest from View Park Towers and Hazina Centre through sales, but it has not been successful due to a lack of offers that matched its valuation.

The fund values Hazina Towers, yet another of its property in Nairobi, at Sh1.5 billion.

In total, NSSF holds Sh31.8 billion worth of property, developed and undeveloped like land, accounting for 14.3 percent of its total net assets of Sh221 billion.

This falls in line with the pension industry’s regulations that cap real-estate holdings at 30 percent of total investment portfolio.

An increase in NSSF holding of shares at the Nairobi bourse in blue chip firms like Safaricom, BAT Kenya, Barclays Bank, East Africa Breweries Limited (EABL) and Bamburi Cement has squeezed the share of real estate—which in the late 1990s was above the regulatory limit.

The fund’s investments in shares stood at Sh65.3 billion in 2018 or 29.4 percent of its assets.

Other NSSF city properties are Hazina Shopping complex in South B (Sh206 million), Hazina School (Sh103 million) and the Sh41 million Hazina Multi-purpose Hall.

Outside Nairobi, the fund holds SSH Mombasa building with a price tag of Sh1.5 billion.

The fund’s contribution from workers stood at Sh17 billion and it paid out Sh4.6 billion as benefits to retirees.