ADVOKS GLOBAL · KENYA
The Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations
113. Basis for valuation and conduct of valuation
Edition: 2023-10-06 · In force
113. Basis for valuation and conduct of valuation
(1)The trustee shall cause a valuation of the real estate assets of the trust to be conducted and ensure that other assets of the trust are appropriately valued—(a)prior to acquisition or disposal of any asset;(b)prior to the issue or offer of any REIT securities except where the issue or offer is made to the promoter or to connected persons;(c)on an annual basis or shorter period as may be necessary to enable the trustee and or the REIT manager to prepare the reports required to be prepared under the Act or these Regulations or to fulfil its obligations as trustee;(d)upon the request of the auditor or REIT securities holders; and(e)at any other time, if the trustee, the REIT manager or the auditor is of the opinion that it is desirable in the interests of the REIT securities holders that a valuation be conducted or that there has been a material change that may result in the current valuation being out-dated.(2)A valuer shall conduct a full valuation of all the real estate assets—(a)based on a full physical inspection of all sites and inspection of all buildings, any facilities erected thereon and connected plant and equipment at least once every three years; and(b)based, in each other year, on a desk top review unless the valuer is of the opinion that a full physical inspection is necessary or is requested by the trustee to conduct a full physical inspection.(3)The trustee and the REIT manager shall, where the assets of the scheme involve—(a)land or real estate under development or construction; or(b)a contract to acquire assets under construction;ensure that—(i)a project manager certifier prepares an assessment report; and(ii)they obtain any structural engineer's report that is required to be obtained,and avail the reports to the valuer prior to the completion of the valuation.(4)An assessment report made under paragraph (3) by the project manager certifier shall include—(a)the estimate of the cost to complete the development or construction;(b)the costs incurred to date in the development or construction;(c)the progress against the original and any revised schedule, contract or project plan; and(d)a comparison of the costs incurred against the original and any amended budgets.(5)A valuer may take into consideration, the assessment or reports submitted to the valuer under paragraph (3) in its valuation and shall disclose the details of the assessment or report and include comments on the impact, if any, the assessment or report has on the valuation.(6)Unless a specialist valuer is appointed, a REIT manager shall value cash, bank deposits, bonds, other assets of a similar type and listed securities on a daily basis and submit to the trustee at the conclusion of each working day details of such valuations so as to enable the trustee to fulfil its obligations under these Regulations.(7)Where—(a)the trustee, at the request of the REIT manager, proposes to issue new REIT securities for subscription; or(b)where redemption is required or permitted, the trustee proposes to redeem REIT securities; and(c)the assets were valued more than six months prior to the proposed issue or redemption, then a desk top valuation, not involving a full physical inspection, shall be conducted by the valuer prior to the issue or redemption:Provided that the REIT manager and the valuer certifies to the trustee that they are not aware of any fact or condition that would have resulted in values of the real estate assets changing materially.(8)Valuations shall be conducted on the basis and in accordance with the procedures and methodologies set out in the Sixth Schedule as well as the valuation standards published and adopted by the Institution of Surveyors of Kenya and the Valuers Registration Board.