NAIROBI, Kenya- The KenGen Staff Retirement Benefits Scheme (RBS) is preparing to sell KenGen RBS Gardens, a furnished and serviced apartment development, as part of an ongoing strategy to restructure its investment portfolio and improve liquidity for future pension payments.
The planned disposal, disclosed in the Scheme’s 2025 annual report, comes months after the retirement benefits fund realized Sh1.9 billion from the sale of two commercial office buildings—Pension Plaza One and Pension Plaza Two—in Nairobi’s Parklands area.
The trustees say the move is part of a broader effort to align the Scheme’s investments with changing financial obligations as the pension fund matures.
Shift Towards More Liquid Investments
According to the annual report, the Scheme is now mature and closed to new members, making it increasingly important to maintain sufficient liquidity to meet retirement benefit payments while ensuring sustainable returns for existing members.
The trustees explained that reducing exposure to real estate is also necessary to comply with the Retirement Benefits Authority (RBA) investment guidelines, which prescribe limits on pension fund investments in property.
“Given that the Scheme is mature and closed to new members, there is an increasing need to align the investment portfolio towards more liquid and income-generating assets to support benefit payments and enhance cash flow flexibility,” the report states.
Funds generated from the Sh1.9 billion property transaction have already been reinvested in fixed-income securities and money market instruments to improve cash flow and generate more stable investment returns.
Strong Financial Performance Despite Property Sales
Despite trimming its property portfolio, the KenGen Staff Retirement Benefits Scheme posted strong financial results during the reporting period.
The Scheme reported:
- Total fund value: Sh10.041 billion
- Gross income: Sh865 million
- Net investment return: Sh1.46 billion
The trustees also declared a 14.8 per cent member crediting rate, saying the return was intended to preserve members’ purchasing power while reflecting prudent investment management.
“A member crediting rate of 14.8pc was declared, preserving members’ purchasing power and reflecting the Scheme’s prudent investment strategy,” the report notes.
The report adds that KenGen RBS Gardens continued to be actively managed throughout the year as preparations for its planned disposal progressed.
Sh1.9 Billion Sale Followed Independent Valuations
The disposal of Pension Plaza One and Pension Plaza Two followed independent property valuations conducted before the transaction.
According to the report, the Scheme’s appointed valuer estimated the two buildings at approximately Sh2.0 billion, while the National Lands Commission valued them at Sh1.8 billion.
Following negotiations, the parties agreed on a purchase price of Sh1.9 billion, excluding VAT.
“Following negotiations, the transaction was concluded at Sh1.9 billion, exclusive of VAT, representing a fair disposal within the valuation range,” the report states.
The trustees described the transaction as part of a strategic portfolio rebalancing exercise aimed at enhancing long-term financial sustainability.
Malindi Property Impairment
Separately, the Scheme disclosed that it recognized a Sh98 million impairment relating to its Malindi property due to an ongoing ownership dispute involving competing claims.
The impairment represents the property’s full carrying value and was recognized in accordance with International Accounting Standard (IAS) 36 – Impairment of Assets.
Management said the provision will be reassessed once the legal dispute is resolved and could be reversed if the Scheme ultimately retains ownership of the property.