The KenGen Staff Retirement Benefits Scheme is preparing another property disposal after selling two office buildings for Sh1.9 billion, as it continues restructuring its investment portfolio to improve liquidity and meet future pension obligations.
According to the Scheme’s 2025 annual report, preparations are underway to divest KenGen RBS Gardens, its furnished and serviced apartment development.
The planned sale follows the disposal of Pension Plaza One and Pension Plaza Two in Nairobi’s Parklands area, which were sold to KenGen during the year as part of a strategic portfolio rebalancing program.
Why the KenGen Scheme Is Selling Property
The report states that the disposal of the two office buildings was undertaken primarily to comply with the Retirement Benefits Authority (RBA) investment guidelines, particularly the prescribed limits on pension fund exposure to real estate.
It further explains that the Scheme is now mature and closed to new members, making it necessary to shift investments toward more liquid and income-generating assets. The objective is to strengthen cash flow, support timely payment of retirement benefits, and improve financial flexibility.
The proceeds from the Sh1.9 billion sale have already been redeployed into higher-yielding fixed-income and money market investments to enhance portfolio liquidity and generate more stable returns.
“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 captured.
Investment Performance
Despite reducing its property holdings, the Scheme reported strong financial performance during the year.
Total fund value stood at Sh10.041 billion, supported by gross income of Sh865 million and a net investment return of Sh1.46 billion.
The trustees declared a 14.8 percent member crediting rate, which the report says was aimed at preserving members’ purchasing power while reflecting the Scheme’s prudent investment strategy.
“A member crediting rate of 14.8% was declared, preserving members’ purchasing power and reflecting the Scheme’s prudent investment strategy,” it noted.
The report also notes that KenGen RBS Gardens continued to be actively managed throughout the year as preparations for its planned divestiture progressed.
Property Valuation and Malindi Dispute
The sale of Pension Plaza One and Pension Plaza Two followed independent property valuations. The Scheme’s valuer assessed the buildings at approximately Sh2.0 billion, while the National Lands Commission valued them at Sh1.8 billion.
Following negotiations, the transaction was concluded at Sh1.9 billion, excluding VAT, a figure the report describes as falling within the independent valuation range.
“Following negotiations, the transaction was concluded at Shs 1.9 billion, exclusive of VAT, representing a fair disposal within the valuation range,” the report confirmed.
Separately, the Scheme disclosed that it recognized a Sh98 million impairment on its Malindi property during 2024 because of an ongoing ownership dispute involving competing claims.
The provision represents the property’s full carrying value and was made in accordance with IAS 36 – Impairment of Assets.
Management said the impairment will be reviewed based on the outcome of the legal proceedings and could be reversed if the Scheme’s ownership of the property is ultimately upheld.
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