Once you understand what a REIT is and how to buy one, the next question becomes more important:

How do you know whether a REIT is actually worth investing in?

Many investors stop at yield. If the distribution looks attractive, they assume the REIT is strong. But yield alone tells you almost nothing about quality, sustainability, or risk.

This guide explains how to evaluate a Kenyan REIT in a practical way — not like a textbook, but like someone deciding whether to commit real money.

If you’re new to REITs entirely, start here first:
Kenya REITs investment guide

If you want the buying process itself, read:
How to invest in a Kenyan REIT step by step

Start With The Assets, Not The Yield

A REIT is only as strong as the properties it owns.

Before looking at percentages or projections, understand what sits underneath the structure. Are the assets completed and income-generating, or are they still under development? Are they located in areas with real tenant demand? Are they concentrated in one property or spread across multiple assets?

A REIT backed by fully operational, occupied properties is fundamentally different from one relying on future assumptions.

If you cannot clearly explain how the REIT makes money from real assets, that is your first warning sign.

Occupancy Matters - But Context Matters More

Occupancy rates are often highlighted in presentations. A 95% occupancy rate sounds reassuring, but the number alone does not tell the full story.

Ask whether the tenants are diversified or concentrated. If one or two large tenants account for most of the income, the REIT is more vulnerable to disruption. Also consider lease duration. Long-term leases provide stability, while short-term leases increase uncertainty.

Healthy occupancy combined with diversified tenants and reasonable lease terms is more important than chasing a perfect percentage.

Debt Can Help - Or Quietly Increase Risk

Most REITs use debt. Borrowing can enhance returns when property income comfortably exceeds interest costs. But excessive leverage introduces fragility.

Look at the overall debt level relative to the asset base and rental income. Is the borrowing clearly explained? Are interest costs manageable? Is the debt long-term and structured, or short-term and exposed to rate increases?

In rising interest rate environments, highly leveraged REITs feel pressure quickly. A sustainable capital structure is often more valuable than a temporarily high yield.

Fees Deserve More Attention Than They Get

Management fees, trustee fees, and other administrative costs are usually mentioned but rarely examined closely.

In smaller REITs especially, fees can consume a meaningful portion of income. Even modest differences in fee structures compound over time.

You do not need to memorise percentages. What matters is whether the fee structure feels aligned with investor returns and whether it is transparent.

If the fee model is difficult to understand, that complexity is not an advantage.

Distribution History Versus Distribution Promises

Some REITs highlight projected yields prominently. But projections are not the same as realised performance.

If the REIT has an operating history, review past distributions. Were they stable? Were they consistent with the policy stated in the offer document? Did the REIT maintain payments during tougher periods?

For newer REITs without long histories, focus on the realism of the assumptions behind projected distributions. Conservative projections inspire more confidence than aggressive forecasts.

Liquidity Is Part of Risk

In Kenya, REIT liquidity can be limited compared to more mature markets.

Even if a REIT looks strong fundamentally, consider how easily you could exit if needed. Listed REITs trade on the market, but trading volumes may be thin. Unlisted structures may depend on specific exit mechanisms.

Liquidity does not determine quality, but it should influence position size and time horizon.

The Management Factor

Behind every REIT is a management team making decisions about acquisitions, financing, leasing, and distributions.

Look for clarity in communication. Are updates transparent and consistent? Does management acknowledge risks as well as opportunities? Is strategy clearly articulated?

Strong assets with weak governance can still disappoint investors.

A Simple Final Test

Before investing, ask yourself a few direct questions.

Do you understand how the REIT generates income?
Are the assets real and functioning?
Is the debt level reasonable?
Are fees clear and justifiable?
Are distribution expectations realistic?
Are you comfortable holding the investment through market cycles?

If you can answer these calmly and confidently, you are likely evaluating the REIT at the right level.

Evaluation Is About Discipline, Not Perfection

No REIT will be flawless. The goal is not to find perfection, but to avoid structural weaknesses that could damage returns.

A well-evaluated REIT becomes easier to hold during volatility because your decision was based on fundamentals rather than excitement.

If you want to compare REITs with other asset classes before deciding on allocation, read:
REITs vs MMFs vs bonds vs equities in Kenya

And for the broader context on how REITs work in Kenya, return to:
Kenya REITs investment guide