Real Estate
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How does someone save when they invest in an off plan compared to buying a ready built house?
Investing off plan means that an investor purchases property before completion. Off plans are generally driven by the high real estate prices and the longevity of time taken to guarantee delivery of completed units, given the low supply rates of real estate units despite consistently increasing prices. Off plans have become increasingly popular since prices of sold property are lower than market prices. Prices can be upto 50% lower. The sale procedure for an off plan development commences with signing of three documents namely: the letter of offer, the reservation form and the sale agreement. It is usually beneficial to buy real estate off plan since:
- Investor benefits from potential high capital gains – Since the investors are acquiring a future asset at current prices and hence in a peaking market buyer attains capital gains and significant margins upon completion.
- Flexible payment plans – since all that is needed is a deposit to a tune of 10 to 20% of purchase prices, with the rest of the amount being paid in flexible instalments or upon completion. This allows individuals without adequate finances to acquire a stake in real estate
- Preference – Buyers have the concession of choosing the most viable locations and can get houses in line with preferences as opposed to buying a complete house where investors are compelled to settle for left over locations.
Off plan investment enhances flexibility as it allows investors to make piece meal payments, this allows the investor to save as it reduces balances to be paid upon completion. Moreover, investors can agree with the seller on how balance will be settled and payments can be made as construction continues this allows for better planning and saving
Investing off plan means that an investor purchases property before completion. Off plans are generally driven by the high real estate prices and the longevity of time taken to guarantee delivery of completed units, given the low supply rates of real estate units despite consistently increasing prices. Off plans have become increasingly popular since prices of sold property are lower than market prices. Prices can be upto 50% lower. The sale procedure for an off plan development commences with signing of three documents namely: the letter of offer, the reservation form and the sale agreement. It is usually beneficial to buy real estate off plan since:
- Investor benefits from potential high capital gains – Since the investors are acquiring a future asset at current prices and hence in a peaking market buyer attains capital gains and significant margins upon completion.
- Flexible payment plans – since all that is needed is a deposit to a tune of 10 to 20% of purchase prices, with the rest of the amount being paid in flexible instalments or upon completion. This allows individuals without adequate finances to acquire a stake in real estate
- Preference – Buyers have the concession of choosing the most viable locations and can get houses in line with preferences as opposed to buying a complete house where investors are compelled to settle for left over locations.
Off plan investment enhances flexibility as it allows investors to make piece meal payments, this allows the investor to save as it reduces balances to be paid upon completion. Moreover, investors can agree with the seller on how balance will be settled and payments can be made as construction continues this allows for better planning and saving
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Are there any structural issues in your projects?
There are no structural issues in our projects. We have an internal Quality Control and Quality Assurance team that visits the sites on a daily basis to vet and ensure the projects meet all the standards. We have hired the best contractors in the market that oversee the development of this sites. To clear any doubt you can also visit any of the sites from the link below http://crm.cytonn.com/clientevents/slug/weekly_real_estate_site_visit
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What is the process of a site visit to any of Cytonn’s developments?
To book a visit please click the link http://crm.cytonn.com/clientevents/slug/weekly_real_estate_site_visit
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What is the status of the Newtown project? In terms of ground breaking and Title Deeds?
Newtown is a masterplan project that will take between 10 to 15 years, which is a standard for projects of such magnitude. The land is being acquired through an extended probate process and that takes time, but we have no doubt that we shall complete. Once the probate process is concluded and transfer done, the title deeds will be issued. We are also in the process of engaging the relevant authorities to build the 10km road connecting the town to the main highway (Mombasa Road), and this too shall take time. Until the transfer issue is resolved we have slowed down on the development. However, we continue to sell it for investors who are taking a very long-term investment horizon that shall not provide liquidity now, but shall provide above average return for the long-term. The concept viability is subject to getting the road however, we are progressing uses that are not dependent on roads such as education.
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Are there plans to have a project around the Lake Naivasha/Mombasa region?
Currently, we are not actively pursuing Lake Naivasha and the Mombasa region since they are not part of our focus areas. However, we keep on looking at the market to find out the most viable areas to invest, this means that we consistently maintain an open perspective on all areas.
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How different are we from other developers in the market?
Real Estate developers are entities involved in the construction, development and the purchase of property after which they sell as improved land to willing buyers. Cytonn Real Estate is a development firm that aims at developing institutional grade real estate. The firm is well equipped with a team of extensively experienced individuals in the field of real estate who work towards delivering quality as well as aspirational real estate developments that encourages community living. Unlike other developers who focus on data collection and analysis, we go an extra mile and identify existing market niches, inform concept development and enhance market knowledge. This requires adept market understanding that facilitates opportunity identification and manipulation. Our diverse networks that span both locally and globally enable us bring together land owners through Joint Ventures (JVs) and tap into capital. We also encourage investor participation making our clients attain what matters most to them through:
- The real estate backed fixed income notes that offer a secure and fixed rate of return over an agreed period of time
- The purchase of completed developments in a project through varied payment methodologies for instance cash terms, instalment price, the mortgage option and the zero deposit that gives client leeway to select the most comfortable payment plan for them based on income and cash-flows.
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What happens if a project that had a larger allocation of funds develops issues and needs to close?
We focus on diversification of our real estate projects, whose concepts are well researched, conveyancing done and peer reviewed. This are also pre-sold before ground breaking. Therefore, probability if close is fairly low.
Corporate
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What is Open to Talk?
Cytonn “Open to Talk” initiative primary purpose is to facilitate an open and transparent engagement with all our stakeholders about the social media challenges we have faced. You can view our responses on the link below https://www.cytonn.com/open-to-talk
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What is the process of being a supplier in Cytonn and do I have preference if I invest?
Send your business profile to procurement@cytonn.com one of the team members will reach out within 2 hours and take them through the procurement process. There is no preference given if you are an investor.
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Cytonn’s standard position and response on any allegation i.e. do we have a standard response?
We have the open to talk platform that we use to address all the concerns. You can view our responses on the link below https://www.cytonn.com/open-to-talk
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Is the staff attrition rate high?
Cytonn through CYLP prepares staff for the market - both at Cytonn and externally. Some staff will leave at different levels of their careers at Cytonn. Second to note is that the Cytonn culture is not a fit for everyone. The fast pace and long working hours especially, make some people leave when they can't keep up. Every successful business has been built through hard work and that is our culture. It’s common for investment and professional services organizations to have high attrition. It’s all the design for our business, to be bottom heavy, so we expect people to leave however, our regrettable attrition rate is low, at 10 percent.
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Is Cytonn a bank?
We are not regulated by the Central Bank of Kenya and are not licensed to take deposits from the public. As discussed above, Cytonn HYS is an investment product, not a banking product. Our investment solutions are privately offered investments through the private offers regulatory framework
Cytonn High Yield Solutions
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Who regulates CHYS?
Cytonn HYS is currently a privately offered solution, offered exclusively to high net worth individuals and is “self-regulated” through its own governance structure of the board, custodian, auditor and principal partner, Cytonn Investments, that is rated by Global Credit Rating (GCR) a credit rating agency
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How are you able to offer 18% yet banks offering much lower rates?
Cytonn HYS rate is priced off the loan price market, not off the money markets. Because the funds are mainly used for real estate development, which is mainly sold off plan, the appropriate benchmark is the cost of loans, and the typical real estate developer accesses bank financing at 14% - 18% per annum
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How come no one else is offering these rates?
Offering higher than average rates requires a comprehensive platform; the Investment Manager has to have the asset yield that can support the return. The Promoter has to have an investment function that interfaces with investors (Cytonn Investments), and a yield generating function that generates the yield (Cytonn Real Estate). Cytonn is the only brand in this market that has coupled up investment management and real estate development onto one platform. A promoter cannot offer high returns without a high yielding asset to support the return
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Why does my bank or relationship manager talk badly about Cytonn HYS?
First, it is possible that RMs don’t understand how structured notes work. Secondly, Cytonn HYS offers a very competitive private alternative to fixed-term bank deposits, hence can be construed to be in direct competition. It is not the first time established players have opposed new products. The banking industry was hesitant when M-Pesa was introduced 10-years ago as a new means for money transfer, but today M-Pesa is the leading means to transact cash. Taxi owners and drivers opposed the introduction of Uber, but today Uber is the most used means of cabbing in Nairobi. And established banks ridiculed the transformation of Equity Bank from a building society to a commercial bank, and today it is the largest bank by market capitalization. History is littered with examples of established order talking down innovation and emerging technologies that are perceived as threatening
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Who does Cytonn HYS target?
Cytonn HYS targets high net worth individuals and institutions with the capacity to understand the risks and complexity of the investments. They have to go through a prequalification process and be admitted by an existing Partner into the Partnership. It is privately offered
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How come other fund managers at some point stopped issuing HYS?
HYS is an unregulated investment solution offered through private channels. Our understanding is that Fund Managers, themselves CMA regulated entities, were issuing HYS in contravention of Section 26 (1) (b) of the Capital Markets Act, which prohibits carrying out “any activity outside the scope of the licensed or approved activities”. The placement has to be structured to conform to the private offers regulations. It is our understanding that other competitors are restructuring their offerings
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What is the profile of investors in Cytonn HYS?
Cytonn HYS investors include local high net worth individuals, Kenyans and other East Africans in the Diaspora, local institutions such as SACCOs and chamas, as well as international institutional investors. The leading investor is Taaleri, a USD 7 billion investor based in Finland, whose representative also sits on the Board
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Is CHYS a Ponzi Scheme?
A Ponzi scheme involves offering high returns that are not supported by any underlying economic activity or enterprise. Essentially returns are paid out of cash flows from new investors. Any offer of above market returns has to be able to demonstrate the actual assets / underlying economic activity that supports the returns. In the case of Cytonn HYS, the returns are supported by the 10 ongoing and largely pre sold developments
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Why did 'Cytonn CMS' change to 'Cytonn HYS'?
Following the licensing of our asset management affiliate, Cytonn Asset Managers Limited, we have been engaging with the regulator to bring certain products within the regulatory ambit.
As part of the process, we renamed Cytonn Cash Management Solutions LLP, (Cytonn CMS) to Cytonn High Yield Solutions LLP, (Cytonn HYS) effective 9th July 2018.
The key reason for the change is to have a name that is consistent with the underlying asset class, which is high yielding real estate that supports the high yield returns. Cytonn HYS typically invests around 70% of the fund into investment grade real estate.
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What are the requirements for joining HYS?
Fill in the Investment Agreement Form and attach the KYC documents, which are; National ID/Passport, KRA Pin, Proof of Banking
Investments
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What happens when there is a default?
To evaluate a default, we need to look at the probability of default and the loss given default. The portfolio contains a highly diversified set of investment grade real estate assets that is selling off plan and liquid investments. Additionally, the corporate guarantee empowers investors to recover any amounts due from the promoter, Cytonn Investments Management Plc. A recent example is the minimal investments Cytonn HYS had in Imperial Bank and Nakumatt Commercial Paper; the defaults were taken up by the promoter, Cytonn Investments Management Plc, hence shielding our investors from any losses
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What is the difference between a deposit offering a rate and an investment offering a rate?
Deposit rates are fixed and guaranteed by the bank, which is regulated by the Central Bank of Kenya. The rate a bank can offer is largely determined by the rate at which they can lend the funds and still keep a margin. On the other hand, an investment rate is determined by the profit returns generated by the commercial enterprise in which the funds are invested, such as real estate development
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What are the minimum amounts for each of the funds available on the mobile app?
The CMMF minimum top-up is Kes 1000
CPN and CHYS have minimum top-ups of Kes 100,000
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How long does a direct bank deposit take to reflect if I use Pesalink?
The funds reflect immediately
Cytonn Money Market Fund
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What is a Money Market Fund?
A money market fund is a Collective Investment Scheme that pools funds from investors and invests in liquid interest earning instruments such as bank deposits, Treasury bills and commercial papers that have a short-term maturity profile. Each investor is allotted units in the fund based on the value of their investment.
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What is the difference between a Money Market Fund and a Bank Deposit?
A bank deposit is a security at a commercial bank, which can be fixed or flexible and earns an agreed interest rate. A money market fund on the other hand is a collective investment scheme, which does not have a fixed return, as the return fluctuates depending on the performance of the underlying investments in the fund, which may also include bank deposits.
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What are the advantages of a Money Market Fund?
There are a number of advantages of investing in a Money Market Fund:
- Professional Fund Management- as the fund is managed by investment experts
- Diversification- With a relatively small investment, investment in a money market fund provides access to a broad spread of securities thus minimizes financial risk
- Potential for Higher returns- through pooling of funds and professional investment management, money market funds potentially provide superior returns than comparable products in the longer term
- Flexibility- you are able to easily move funds between various other collective investment schemes like the Balanced and Equity Fund
- Accessibility- the money market fund is liquid and easily accessible, meaning you can withdraw funds at short notice
- Safety- the fund is regulated by the Capital Markets Authority and is also overseen by a dedicated trustee and custodian whose role is to ensure that the fund manager acts in the investors’ best interest and conforms to best practice
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What is the withholding tax for Cytonn Money Market Fund and is the tax final? When is the tax submitted?
A withholding tax of 15% for both residents and non-residents is paid on the interest earned and is remitted by the 20th day of each month. Yes, the tax is final since CMMF is a Collective Investment Scheme
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Where does the fund manager invest the funds collected from Cytonn Money Market Fund?
The funds are invested in high-quality interest bearing assets such as the Fixed Income instruments and other short term money market instruments such as the fixed deposits
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Can I invest in CMMF USD?
Yes, CMMF USD is available for all investors who are looking to invest using the United States Dollar (USD) currency
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What is the withholding tax for CMMF?
A withholding tax of 15% for both residents and non-residents is paid on the interest earned on CMMF and is remitted by the 20th day of each month. The tax, however, is final since CMMF is a Collective Investment Scheme
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What is the management fee for CMMF and at what point is the management fee charged?
The management fee for CMMF is currently at 1.5% Per Annum on the average Asset under Management of the Fund, and it accrues daily as such translating to a daily fee of 0.004%
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Where are the funds invested?
Money market funds are low risk and geared towards capital preservation while still providing for flexibility on liquidation. Our current market allocation is:
- 60% bank deposits, but the target is usually 50%,
- 20% government paper, the target is 25%,
- 20% other, including commercial paper and high yielding investments; the target is 25%.
These allocations are strictly in compliance with both the CMA Regulations and the Trust Deed and Rules.
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Where can we monitor the fund manager’s performance?
The daily and annual yields of the Fund are published in the newspaper. Alternatively, you can track the performance online through logging in your client account on our website, USSD through *809# or by using the Cytonn App that is available on both Google Play store Store and Apple App Store
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Is interest in CMMF negotiable?
No, the interest is not negotiable. It is based on the performance of the underlying assets where the Funds have been invested. The funds are invested in high-quality interest-bearing assets such as Fixed Income instruments and other short-term money market instruments such as fixed deposits.
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Are rates inclusive of management fee?
Yes, however, the management fee does not reduce your earnings. This is because the rates are based on the Net asset value of the Fund and as such management fee has been factored in.
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How do I invest in Cytonn Money Market fund?
Clients can invest in CMMF with as little as Kshs 100 using the following methods:
Method 1 – Using the web platform.
- Visit https://clients.cytonn.com/apply/investment
- Fill in the online application form.
- Enter token sent to your phone number.
- Deposit as little as Kshs 100 using your Bank account or M-PESA.
- Click on Submit and Complete the Application.
NB. You will then receive an SMS acknowledging account creation and an activation link sent to your email that expires in 24 hours.
Method 2 – Using USSD.
- Dial *809#.
- Select Create Account.
- Enter your full names.
- Enter your ID number or Passport number.
- Enter the source of funds.
- Enter your email address (optional).
- Enter FA Referral Code (optional).
- Choose the product to invest in (CMMF).
- Enter the amount to invest.
- Choose the payment method (Bank or M-PESA).
- Confirm your Details
You will then receive an SMS acknowledging account creation, the account temporary PIN, your client code and link to Terms and Conditions
Method 3 - Using the Cytonn App (available on Android Play Store or iOS App Store).
- Download the Cytonn Mobile app.
- Enter the amount to invest.
- Accept terms and conditions.
- Enter the application details.
- Enter token sent to your phone number.
- Choose the payment method (Bank or M-PESA).
NB. By choosing Bank as the payment method on any of our platforms, you will receive our Bank deposit details via SMS.
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How do I withdraw in Cytonn Money Market fund?
Clients can withdraw their CMMF funds to either M-PESA or Bank account on all our platforms using the following methods:
Method 1 – Using our web platform.
- Visit https://clients.cytonn.com/
- Once Logged in, click on view fund (CMMF).
- Click "Sell Units".
- Select product to withdraw from.
- Select the account to send the funds to (details on record will be displayed).
- Enter the number of units you would like to withdraw.
- Confirm sell unit details.
- Enter token sent via SMS/Email/Authy.
Method 2 – Using USSD.
- Dial *809#.
- Enter your PIN.
- Select Option 1: Transact.
- Then Option 2: Withdraw.
- Choose the product to withdraw from (CMMF).
- Choose where you would like us to send the money:
- • Option 1. M-PESA
- • Option 2. BANK
- Select the account to send the funds to (details on record will be displayed).
- Input the amount you would like to withdraw.
- Confirm details.
Method 3 – Using the Cytonn App (available on Android Play Store or iOS App Store).
- Once logged in, click on your CMMF investment.
- Click "Sell Units".
- Enter the number of units to withdraw.
- Select Bank account/M-PESA number to send funds to.
- Confirm details.
- Enter token sent via SMS/Email/Authy.
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After the government initiative to reduce the tax due to the pandemic, has the withholding tax been reduced on CMMF?
No, the President’s directive on the tax relief to cushion the economy and Kenyans from the effects of Coronavirus does not affect the Withholding Tax (WHT). CMMFs withholding tax remains as is, 15.0% on the interest earned
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Who are your trustee and custodian?
Co-operative Bank of Kenya (Coop Bank) is the funds’ Trustee while Kenya Commercial Bank of Kenya (KCB) is the funds’ custodian
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How will COVID 19 affect Cytonn Money Market Fund?
With the flight of investors to safe havens in fixed income instruments, returns on CMMF will remain relatively stable and liquid due to the adequate buffer provided by the stability in the government yields. You can read more from our topical. Click
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How do I open a Money Market Fund for a minor?
Clients who wish to open a CMMF account for a minor will fill the online application form with the details of the minor. The parent / legal guardian will sign all the documents. Upon attaining the age of 18, the minor will be entitled to the investment.
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How long is the withdrawal period for Cytonn Money Market Fund?
For withdrawals below 300k, this will be done automatically to M-PESA or bank and received within 3 minutes. Withdrawals above 300k can only be done to the bank and will take 2-4 working days. All withdrawal instructions have to be done through any of the online platforms or USSD. Any manual instructions will attract an additional charge of Kshs. 200 to process.
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What ways can clients in the diaspora register for CMMF?
Clients in the diaspora can register using the online platform https://clients.cytonn.com/apply/investment or through the Cytonn Mobile Application.
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What are the risks when investing in CMMF?
Although CMMF is a low-risk investment, it is prone to risks such as the interest rate risks. Returns on the fund are pegged on the performance of the interest-bearing assets. When the yields decline, the interest rate for the fund also declines and vice versa
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What is the minimum amount of investment?
You can invest in CMMF with as little as Kshs 100
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Can I lose my principal when I invest in CMMF?
No, since CMMF is a low-risk investment your principal invested is safe.
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Is the interest rate fixed in CMMF?
No. The overall returns for the fund fluctuate depending on the performance of the interest-bearing assets the fund has invested in
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Are top-ups mandatory in CMMF?
Top-ups are not mandatory in CMMF. Clients can top-up their CMMF accounts at their convenience
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What's my Client code/Account number?
You can retrieve your client code in the following ways:
Via Short Code *809#:
- Dial *809#
- Enter your PIN
- Select My Account
- Check Balance
- Your Client Code/Account No will be displayed beside your balance as follows:
Account 12345 - KES XXX
Via Mobile App:
Select Accounts on the bottom right of the navigation pane.
Your Client code/Ac No will be displayed beside your account name.
Via Web:
Multiple Accounts
Visit clients.cytonn.com and log in to your account.
Your client code/ Ac No will be displayed on the top right of your screen
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How do I retrieve my *809# PIN?
If you have forgotten your PIN, simply do the following to set a new PIN:
- Dial *809#
- Enter 00
- Enter ID no. in prompt
- Enter your new PIN
You will receive a text message with your new PIN.
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How do I reset my password?
You can reset your password via the Web portal or Mobile App:
- Click forgot password.
- Enter your username or email address you used to register in the prompt given.
- Choose the mode of verification to verify your identity
- Enter the verification token sent to you
- Create a new password.
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How do I activate my online account?
- Visit clients.cytonn.com
- Click 'Activate my online account'
- Enter your assigned username or email address used to register
- Verify your identity using the verification token sent to you on SMS
- Create and confirm your password
- Login
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Activation link is not working
Visit clients.cytonn.com and follow the steps in Question 5 above
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How do I access my new CMMF account?
You can manage your CMMF account in the following ways:
To access via *809#
- After creating your account via *809#, we shall send you a text message with your temporary PIN.
- Dial *809# and enter the temporary PIN sent to you.
- Change to your preferred PIN
To access via Web Portal
- Visit clients.cytonn.com
- Select Activate my account
- Enter your assigned username or email address used to register
- Verify your identity using the verification token sent to you on SMS
- Create and confirm your password
- Login
To access via Mobile App
- Activate your account via the web portal as shown above.
- Download the Mobile App from the Play Store or App Store.
- Enter your Login details.
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How do I validate my ID?
Using the Cytonn App
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Login to the Cytonn App
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Click on Profile
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Click on Personal Information
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Click on ID/Passport
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Upload ID details
Using the Cytonn Client portal.
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Login to the Cytonn Client portal.
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Click on My Profile
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Click on Personal Information
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Click on ID/Passport
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Upload ID details
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How many days does the funds reflect in the CMMF account?
M-Pesa deposits made on working days reflect after 24hrs.
Top up via Bank
Local banking
Local deposits made on working days take 12-48hrs to reflect. A business confirmation is sent once the investment has been made.
Diaspora banking
Diaspora deposits take 2-4 working days to reflect.
Note:
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Working days include Monday to Friday.
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Working days exclude holidays and weekends.
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Deposits made on eve of or during holidays/weekends will assume the timelines stated above, 'from the next working day.'
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In some cases, we might ask you to send proof of payment.
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How do I TopUp to the CMMF?
Using the Cytonn App
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Login to the Cytonn App
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Click on Top Up
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Enter amount
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Choose bank/M-Pesa
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For Bank attach an image of the deposit slip/payment screenshot.
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Click on Buy Units.
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Confirm transaction.
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Enter Mpesa PIN for M-Pesa option
Using the Cytonn Client portal.
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Login to the Cytonn Client portal.
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Click on Dashboard
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Click on Top-Up
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Enter amount
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Choose bank/M-Pesa
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For Bank attach an image of the deposit slip/payment screenshot.
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Click on Top Up.
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Confirm transaction.
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Enter Mpesa PIN for M-pesa option.
Using *809#
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Enter USSD PIN
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Select Option 1 top up
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Select account to transact from
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Confirm Clinet code
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Input amount tom top up
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Choose method of payment Bank/M-Pesa
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Enter M-Pesa PIN.
Direct Paybill.
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Business NUMBER:775093(CMMF Direct Paybill).
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Account No:Your Client Code.(This is the direct paybill automatically updates on mail and text charges for amounts above 100 bob.)
Using SBM BankOnline Transfer.
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Account Name:Cytonn Money Market Fund Collection Account.
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Account Number:0012400721001.
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Bank Name:SBM Bank(Kenya)Limited.
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Branch:City Centre Branch.
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Bank Code:060.
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Swift Code:SBMKENYA.
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P.O.Box:20695-00200 Nairobi.
Via M-Pesa Paybill
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Business Number:552800(SBM Bank’s Paybill).
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Account Number:0012400721001.
After that you can share a proof of deposit to our email.Contact the client services at clientservices@cytonn.com case of any queries.
Note:
The minimum investment amount is Ksh 100.
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How do I open a CMMF Account?
Using Cytonn App
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Download the Cytonn App from the PlayStore/ App Store.
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Open the App and Sign Up.
Using Web Portal
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Visit our website clients.cytonn.com.
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Sign Up.
Using USSD
Dial *809# then Create an account
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Pension
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What is Cytonn Personal Retirement Benefits Scheme (CPRBS)?
This is a scheme designed to enable individuals to save for their retirement by making regular contributions to the scheme during their working years and growing their retirement savings. The retirement age for the scheme is 60 years.
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What is the minimum contribution?
Members may contribute as low as Kshs. 1000 per month.
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How do I transfer my contributions from another retirement benefits scheme to CPRBS?
To transfer contributions from another registered retirement benefits scheme to CPRBS, one would be required to fill an exit form for the said scheme and on the exit form, they choose the option of ‘transfer to another scheme’, where they will input the details of the CPRBS, including their membership number and the benefits will be transferred accordingly.
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Can I move my personal contributions from an umbrella to a personal scheme?
Yes, upon leaving the service of the participating employer of the umbrella scheme, one can transfer their contributions as well as the employer’s contribution into a personal pension scheme. The process will be similar to 3 above
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How are the schemes assets invested?
Each scheme has an Investment Policy Statement (IPS) that guides the Fund Manager when making investments of the Scheme. The IPS contains investment limits of the scheme’s assets in different asset classes. The limits are in line with the RBA regulation.
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What returns can I expect?
CPRBS is a segregated scheme and as such cannot guarantee a return. However, our strategy as Cytonn Asset Managers is to have a well-diversified portfolio, capitalizing on our capability in alternative investments and thus optimize investment returns and offer members above market average returns, as we have been able to offer for all our products.
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Who are the service providers for the scheme?
The service providers of the CPRBS are:
- Trustees- Kingsland Court Trustee Services
- Administrators- Enwealth Financial Services
- Custodian- Standard Chartered Bank
- Fund Manager- Cytonn Asset Managers Limited
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How do I join the scheme?
Fill in the application form and attach a copy of your ID/Passport, KRA PIN and proof of address. Once you make your first contributions, you shall be issued with a membership number.
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What happens if I die or I am no longer able to meet the obligations?
The total fund made up of the contributions plus the investment returns is paid to the nominated beneficiary upon death of the member.
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How do I know how much I have contributed to the scheme and the interest I have earned?
We send contribution statements to members on a monthly basis. You can also log in into the client portal and see your client statement. The interest is distributed to the members once a year after the scheme is audited and thus the interest will reflect on your statement after distribution.
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Is there a need for me to join CPRBS if I already have NSSF?
With NSSF monthly contributions being about Kshs 200 for employee and Kshs 200 for the employer, the benefits paid out are not enough to provide for your retirement, and thus you will need to join another scheme to help grow your retirement pot.
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Do the contributions I made to the scheme earn interest?
Yes. Contributions are invested and start earning interest from the day the contributions are received. The total accumulated funds is made up of your contributions plus the investment income.
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Is it true that if I change my job I cannot access my benefits before attaining the retirement age?
After changing jobs, you can access 100% of your contributions but you cannot access the employer’s contributions until retirement. You can however choose to transfer the benefits to another scheme.
For self-employed individuals, where there is no employer contributions, one can withdraw from the fund anytime, before retirement, and be paid 100% of their contributions, less applicable tax
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What is the difference between an income drawdown and an annuity?
An income drawdown is an arrangement where at retirement, the retiree transfers his/her retirement benefits into an income drawdown fund and chooses to withdraw a certain percentage of his retirement benefits monthly, quarterly, semi-annual or annually for a minimum of 10 years. After the 10 years, one can withdraw the balance as a lump sum, continue with the drawdown or purchase an annuity. For income drawdown, the funds are invested and they continue to grow.
An annuity is a contract between an individual and an insurance company. In exchange for the lump sum that is paid by the individual, the insurance company agrees to make regular guaranteed payments according to the terms of the contract.
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How do I access my benefits on retirement?
Your benefit is paid as a Lump Sum at retirement. You can then choose to purchase and annuity or transfer the benefits into an income drawdown fund.
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Are there any Tax benefits
KRA allows tax relief of up-to 240,000p.a or 30% of your annual earnings, whichever is lower for amounts contributed to a registered scheme. At withdrawal or retirement, you are entitle do a tax free lump sum from the fund of 60,000 for every year of membership to the scheme subject to a maximum of 600,000
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Can I make additional voluntary contributions?
Yes you can
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Can I change my nomination of beneficiary?
You may change your nominated beneficiary or beneficiaries at any time with the scheme administrator
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Can I use the benefits as security to secure a mortgage?
Yes. You can assign up to 60% of your accumulated benefits as additional security for a mortgage.
Cytonn High Yield Fund
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What is CHYF?
Cytonn High Yield Fund (CHYF) is a specialized Collective Investments Scheme licensed by the Capital Markets Authority (CMA). CHYF has a heavy allocation in the Real Estate sector and thus enabling the investors to access the attractive returns offered by this sector through real estate backed securities.
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What is the minimum investment in CHYF?
The minimum initial investment into CHYF is Kshs 1,000,000.
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What is the tenor for CHYF investments?
All investments are subject to a 3 months lock-in period, after which investors can withdraw their funds if they so wish.
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What return will CHYF offer?
The performance of the fund will be based on the performance of the underlying assets, our target rate of return is 14%p.a.-15%p.a. This rate is not guaranteed
The pricing for the fund will be done on a daily basis and the yields will be published on the daily newspapers where clients can confirm the prevailing rate.
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What is the commission for selling CHYF?
The commission will be 1% p.a. payable monthly, on a trailer basis. Subject to the override policy.
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What will be the value proposition for CHYF?
CHYF has the following value propositions:
- Regulatory Oversight-The Capital Markets Authority has maintained oversight of the operation of CHYF including investment actions of the fund manager to ensure the Investors funds are protected;
- Trustee Oversight- In addition to having regulatory oversight, the Fund also has an independent trustee who ensures that the fund operates in accordance with stipulated CIS regulations; this as well acts to protect the investors’ funds; and
- Tax incentive- Being a regulated Unit Trust product, investors will only pay a first and final tax (withholding tax) of 15% on interest income.
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Who are the service providers for CHYF?
- Trustee: NatBank Trustee and Investment Services
- Fund Administrator: Cytonn Asset Managers Limited
- Fund Manager: Cytonn Asset Managers Limited
- Custodian: State Bank of Mauritius (Kenya)
Cytonn Affordable Housing Investment Plan
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What is Cytonn Affordable Housing Investment Plan (CAHIP)?
CAHIP is a platform structured by Cytonn Investments, in collaboration with its affiliated Fund Manager, Cytonn Asset Managers, with the aim of enabling Kenyans own a home through saving into the Cytonn Money Market Fund, CMMF.
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Is the Cytonn Affordable Housing Investment Plan (CAHIP) only open to first-time home buyers?
No. Any individual can make savings towards the purchase or construction of a home without necessarily being a first-time home-buyer.
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What are the main requirements for one to open a CAHIP account?
If an existing CMMF account holder, the individual will be required to fill in CAHIP form and pay an account opening fee of Kshs 1,000.
If not an existing CMMF account holders, they will be required to open one, in addition to filling the CAHIP form and paying an account opening fee of Kshs 1,000.
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What are the benefits of saving for the purchase of a house through CAHIP?
Savers will benefit in the following ways;
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- Access a flexible platform for savings towards home purchase,
- Tax advantage with a tax exemption on income, to a maximum of Kshs 8,000 per month or Kshs 96,000 per annum, in addition to tax exemption on interest income of up to Kshs 3.0 mn upon withdrawal
- Relatively high returns compared to the market, with CAHIP’s target at 11% p.a
- Relatively low minimum initial and monthly investment set at Kshs 1,000 p.m
- Development of a credit profile, as the contracted savings may act as proof to a financial institution of their creditworthiness, thus raising their chances of accessing a mortgage loan upon maturity of the savings, and,
- It encourages a savings culture which ultimately makes it easier for an individual to acquire a home by efficiently raising a deposit for a house loan.
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Is CAHIP open to corporates?
No. As per the provisions of the Income Tax Act, the HOSP tax benefits are extended to individuals and as such, corporates are not eligible for the CAHIP product. However, individuals can operate a joint account.
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What are the minimum contributions a saver can make to their CAHIP account?
The minimum investment is set at Kshs 1,000 per month with no maximum, which means the individual can save as much as they can.
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What is the maximum amount of savings can one make through their CAHIP account?
CAHIP has no set limit on the maximum amount one can save. However, only Kshs 8,000 per month or Kshs 96,000 per year, shall be exempted from the taxable income.
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Is a saver penalized for a default in making monthly remittances?
No. There exists no penalty for individuals who fail to make their monthly remittance. However, key to note, if you skip any month, you get the tax benefit on amounts you have already contributed against your taxable income.
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After what period of time can one withdraw their savings from their CAHIP account?
CAHIP does not restrict on the period of time one is allowed to make their savings. This means that they can save up for as long as they wish and/or until they have a property (residential house or land) into which they would like to direct the savings.
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What are the requirements for one to withdraw their savings from their CAHIP account?
Withdrawal must be made strictly either to buy or construct a house, or buy land for construction and evidence MUST be provided. However, if the depositor utilizes the funds for any other purpose other than the above mentioned, the savings become taxable in the year of withdrawal.
Legal
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What are the requirements for one to withdraw their savings from their CAHIP account?
Withdrawal must be made strictly either to buy or construct a house, or buy land for construction and evidence MUST be provided.
However, if the depositor utilizes the funds for any other purpose other than the above mentioned, the savings become taxable in the year of withdrawal.
Status of CHYS/CPN Investments
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Clarify whether there was an insurance cover against loss of clients’ investments in CHYS/CPN
There was no insurance cover against loss in CHYS/CPN investments
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I had invested in CPN & CHYS and I feel I am left out from the whole process as I am a resident outside of Kenya
All investors on record in both CHYS/CPN, both local and diaspora clients, are included in the ongoing debt resolution.
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What is the position of the CHYS/CPN Creditors vis a vis the Senior Lenders such as Banks? Does it matter that the Bank came in later?
Senior Lenders such as Banks and funds with registered charge documents are secured creditors who rank higher than unsecured creditors including the CHYS/CPN investors, therefore at the point of debt settlement, senior and secured lenders are paid first. It does not matter at what time they invested into the projects at the point of cashflow settlement.
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Is there a WhatsApp group for CHYS/CPN investors and how do I get the link to join in?
There is a telegram group to which one is added. See herein the link to support the debt settlement proposal through restructuring.
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What is the current position of the assets and liabilities of the CHYS/CPN funds?
The assets and liabilities of the CHYS/COPN funds are to being handled by the Official Receiver as the liquidator over the funds.
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Is it possible to confirm to each individual your confirmed figure in both investments?
Yes. This was shared on 31st August 2021.
Appeal of the Ruling in Insolvency Cause E063 of 2021 and EO64 of 2021.
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Is the appeal window still open?
Yes, the appeal window is still open however, clients need to make a quick decision whether they are supporting restructuring or liquidation, as there is an imminent risk of asset disposal to pay off senior lenders first and leaving CHYS/CPN creditors unable to realize best value on quick asset disposals.
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Is the appeal based on the number of investors or the amount each investor has invested in the products?
No. The appeal will be purely based on merit and the arguments placed before the judge. However, having more clients supporting the debt settlement proposal as opposed to the liquidation process will strengthen the appeal case.
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If investors have already filed with the OR can they still enjoin in the appeal?
Yes. Filing the proof of debt was only a formality. That does not prevent one from supporting restructuring to realize best value for investors funds.
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The Appeal is being handled by Mali Advocates where Cytonn’s CEO is supposedly an owner. Isn’t that a conflict of interest?
Edwin Dande is not and cannot be part owner of a Law Firm as he is not admitted as an Advocate of the High Court. His dealings in Mali are limited to consultations on business due to his extensive experience in the Cytonn business that has litigations. Furthermore, in the case of the Appeal, Cytonn’s interests and those of the creditors and/or real estate unit holders are aligned.
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Clarify the appeal legal fee that investors have been asked to pay of Kshs.30,000, if one opts for this?
Only investors in Real Estate, who are seeking to enjoin on appeals pay the appeal fees of Kshs. 30,000. A deposit of Kshs. 10,000 is paid on initial instruction, the balance is paid as follows; Kshs.10,000 is to be paid at hearing stage; and Kshs. 10,000 to be paid on judgment.
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What if Mali fails to deliver, do you refund the appeal legal fees paid by Real Estate Investors?
Just like any other court matter, Mali Advocates will represent the real estate holders and CHYS/CPN investors to the best of their ability in accordance with the duty owed to every client by their Advocates. However, the final decision rests with the Court. The fees are not refundable, however the appeal is a consideration each investor needs to undertake if they deem that in their best interest to pursue the restructuring, in the benefit of getting best value for their investments.
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Is Mali Advocates legal fees for CHYS/CPN clients catered for by Cytonn?
Yes. CHYS/CPN do not pay any appeal legal fees, the legal fees are currently being borne by Cytonn.
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How does one join the group of investors going to court?
You can do this by signing the restructuring support letter. Kindly follow this link to download a copy, fill in the details and share back to clientservices@cytonn.com
Progress of the Liquidation Process.
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How many investors have filed proof of debt with the Official Receiver (OR) to date and what value is represented?
This information can only be acquired from the office of the Official Receiver. However Cytonn shared with OR information for all investors balances as per their request for information.
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What progress has the OR done so far? Has the liquidator even shared a plan or a proposal?
We are not in a position to speak on behalf of the OR, he has however organized one official meeting; and subsequently sent letters to investor; using the official domain brs.go.ke. However, we know he has been engaging the clients and any progress from their side has been updated to the clients who have attended the meetings organized by their offices.
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What happens if I have not submitted the proof of debt yet?
Do get intouch with the office of the Official Receiver whose offices are located on 17th Floor, 316 Upperhill Chambers, 2nd Ngong Avenue, Upperhill, Nairobi, Kenya
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The Liquidator highlighted that before the Creditors get paid they would first pay themselves from whatever they have gotten before paying others. Kindly elaborate.
In accordance with Insolvency Laws, the Official Receiver as Liquidator is entitled to receive compensation for costs incurred in the Liquidation process.
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How is your work relationship with the OR given that you don't support liquidation?
We are obliged by law to cooperate with the OR, which we have continued to do, including supplying information related to the two funds, until such a time when liquidation will be stopped by the court through the ongoing appeals.
Debt Settlement Plan (Restructuring) vs. Liquidation.
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Now that the court has given orders for liquidation, what does that mean to us or me as an individual investor simply put?
The Liquidation process provides for the winding up of the CHYS/CPN investment vehicles. The Official Receiver takes over the funds, gathers all the assets and pays all liabilities, in order of senior and secured creditors, followed by unsecured creditors. The CHYS/CPN Creditors will be paid out as part of the unsecured creditors/liabilities.
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Under Liquidation how much will creditors recover and what basis have you achieved this figure ?
From Cytonn’s analysis, Liquidation will result in creditors recovering only 14% of their total investments. This figure was achieved by the disposal of the assets at forced sale values in the market; and offsetting the liabilities owed to the senior and secured lenders first; then CHYS/CPN and other creditors such as vendors who are owed who are unsecured.
The liquidation values for example will consider incomplete projects disposal values, based on market update. The values will also consider what is due to secured lenders first, and finally trickling down to unsecured creditors.
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How is the DSP as proposed by Cytonn more beneficial to Creditors as opposed to Liquidation?
From our analysis, a liquidation will result in the creditors recovering only 14% of their total investment while they will recover their full Principal via the DSP.
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You are still proposing restructuring yet the liquidation order was issued. Can the two work together? Is this meeting meant to convince investors to oppose the liquidation order?
Restructuring and liquidation cannot work together since they stand for different ideologies. The meeting is meant to convince the investors to support restructuring since it stands for more value for the investors.
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I thought with the liquidation process underway, the train has already left the station and the situation is irreversible. How do you plan to stop this for restructuring to kick in?
Yes, the liquidation process is already underway. However our legal team had already filed a notice of appeal in the appellate court and obtained the certificate of delay.In light of this the liquidation process can still be stopped.
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How do you sign up for the restructuring and can one do it immediately?
By signing the Restructuring Support Letter/Form as provided by the Principal Partner and can be accessed under this link.
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Why an option of forming a new company when assumptions are you will be trading profitably?
This decision was arrived at after receiving feedback from CHYS/CPN Clients that an independent entity should implement the Restructuring.
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Can we have a neutral receiver manager spearhead the restructuring process?
The investors will be part of the Board spearheading the restructuring and thus can easily keep track of the process.
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What changes have happened in Cytonn internally to give confidence to us, the CHYS/CPN investors, to entrust interest back to them that our interest will be covered?
The investors will be part of the Board spearheading the restructuring and thus can easily keep track of the process and ensure the CHYS/CPN investors’ interest is covered. Furthermore, the restructuring is to be approved by the court, it will be binding and the fund manager will be held accountable in case it is not fruitful.
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If the projects proceed in line with the Debt Settlement Plan, are investors guaranteed to get 100% principal over 5-6 years? Is this documented, guaranteed and you will be held accountable if not affected?
Our evaluation of the complete projects easily shows that we can refund 100% of the money paid in the said period.Given that the restructuring proposal has to be approved by the court, it will be binding and the fund manager will be held accountable in case it is not fruitful.
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The DSP proposes that investors waive interests in 2020 and 2021, but what about 2023 to 2028?
During that period we will be working to complete the project and recover the principal in full first. Any monies raised above that will be distributed to the clients in an equitable manner
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Does the DSP take into account the value of money in the year 2020 versus 7-8 years from now i.e. 2030? The value for money is just depreciating over the years. How will the repayment to investors in the suggested phased approach factor in inflation?
Unfortunately from our analysis, despite Cytonn’s best efforts, we will only be able to give back Principal invested.
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If we have to go the restructuring way, can the first 20% be paid immediately to assure investors?
As we have shared, the funds are currently illiquid and there are insufficient funds to pay out 20%. As indicated in the DSP that we have shared with the creditors and the Official Receiver, the repayment plan will be 20% in 2025, 20% in 2026, 20% in 2027 and 40% in 2028.
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There was a chance for restructuring 2021/2022. Nothing happened. How can we be sure something will happen this time?
In 2021/2022 we were in discussions with the Administrator on the restructuring plan. However, discussions with the Administrator were unfruitful as the funds were put into liquidation before any meaningful progress could be made.
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Why not refund the principal to small investors with 1 million and below not interested in projects?
All clients must be treated equally and fairly. Furthermore, it is not easy to specify what small amounts really mean. Once the DSP is approved, the Board which includes the creditors’ representative may vote to allow extreme cases to be paid out first.
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How many creditors have signed the restructuring form? Is it verifiable?
As of 30th June 2023, the number of CHYS/CPN Creditors who have signed the restructuring agreement are 60. The list has been growing since then.
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Where is the 100% realization when we propose to convert half of the principal to equity?
The DSP proposes that CIM will float its shares on a Unlisted Security Platform (USP). We expect this move to open doors for investors to buy back shares at KShs 1.5 bn per year from equity holders who seek to exit early.
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For those interested in buyouts what is the way forward?
This is welcome, if you have a buyer we will assist in completing the buyout process, if not we will notify you when we have a buyer ready.
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Why not value the assets through independent value and request transfer to willing investors who can dispose them at credible rates and own time?
Conversion and assignment of CHYS/CPN investments was an option offered to all investors and those willing already took up real estate units to dispose at credible rates at their own time.
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How does the DSP define the principal in 2019 for someone whose investment dates back to say 2017?
Principal, regardless of period of investment, is simply the amount that the investor sent into the funds. This means we shall exclude any interest accrued whether paid or not yet paid. This was confirmed at a meeting with the Official Receiver on 7th March 2023.
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Are the real estate projects envisioned in the Debt Settlement Plan (DSP) currently ongoing or are they still stalled?
The projects are currently on hold due to illiquidity of funds and the preservation orders issued by the High Court in E063 of 2021 and E064 of 2021
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Can the interest for 2020/2021 be converted to equity and not waived?
The period after the Covid-19 pandemic has not seen much activity in real estate and that is why the investment manager is proposing a waiver of that interest. However, we expect the share component of the restructuring offer to make up for the lost interest when the shares gain in value.
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Is it only the CHYS/CPN creditors who are being asked to waive interest or all other stakeholders?
We have negotiated with all stakeholders including the banks for the best possible outcome for everyone involved.
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Can Cytonn allow creditors to propose their own restructuring offer?
The Current debt settlement plan (DSP) was arrived at after expert analysis of the current illiquidity of the CHYS/CPN funds and realistic projections of what is indeed possible while considering what is in the best interest of the CHYS/CPN Clients. We have, however, always been open to suggestions and have incorporated recommendations by the CHYS/CPN Creditors which we have received in all CHYS/CPN Restructuring Meetings.
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What happens to those that will not take any action/route restructuring or liquidation but wait on Cytonn to do the right and fair thing by 2030?
Failure to take a stand means a Creditor has no say in what happens with his/her investments which we deem a risky approach.
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Why waiver of interest for 2020 & 2021 yet you were collecting money from investors even during that period? Further, if the assets are gaining in value why not pay interest?
The collections during post covid were not significant enough to advance the projects. Not much has happened to the projects and consequently we need to restructure so as to advance the projects.
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How will Cytonn mobilize funds needed to complete projects as proposed in the DSP with all the litigations and legalities confronted?
This will be achieved through asset sales e.g Kilimani Land. We foresee reduced litigation following the consensus arrived at between Cytonn and the CHYS/CPN creditors
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Noting that you have been unable to sell the Kilimani plot so far, what timescales are you giving for the restructuring plan and the sale of assets including Kilimani?
Prior to the preservation orders issued on 6th January 2023, we had received bids from several interested buyers and our lawyers had already shared the sale Agreement with the most eligible buyer to begin the sale process. There are many potential buyers who have only been deterred by the court ruling.
Cytonn Real Estate Holdings.
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What led to the halting of the Real Estate Projects
Our aggressive real estate strategy was upended by the onset of Covid 19, which upset the liquidity of real estate funds globally. Further, the effects of the incessant negative publicity driven by CMA’s management and several others also led to put a strain on our two main real estate funds during an already difficult period. This led us to only do one project at a time starting with ‘The Alma’.
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What happens to those who converted to River run plots and made all the required payments?
They are welcome to join the appeal of lifting preservation orders. This is done by signing the Real Estate Appeal Letter (REAL) available on this link and paying kshs.30,000 legal fees.A deposit of Kshs. 10,000 is paid on initial instruction, the balance is paid as follows; Kshs.10,000 is to be paid at hearing stage; and Kshs. 10,000 to be paid on judgment
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My unit at the Alma is already paid for, when/how can we get our Sub Lease and ownership documents and/or possession. What is the best way forward?
The preservation orders issued by the High Court on 6th January 2023 in Insolvency Petition E063 of 2021 and E064 of 2021 prevent transfer of Title to yourself. We advise you to join the appeal by real estate unit holders like yourself who have been prevented from concluding the transfer process by the said orders. For further assistance on all other matters including possession please contact rei@cytonn.com
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Is it true that Alma has never sold because of density? More than 100 units per acre is too much for a premium property.
Alma had been selling well prior to the preservation orders issued by the High Court in Insolvency Petition E063 of 2021 and Insolvency Petition E064 of 2021.
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I paid 80% for an apartment in The Ridge. How should I proceed?
The preservation orders issued by the High Court on 6th January 2023 in Insolvency Petition E063 of 2021 and E064 of 2021 prevent transfer of Title to yourself. We advise you to join the appeal by real estate unit holders like yourself who have been prevented from concluding the transfer process by the said orders. For further assistance on all other matters including possession please contact rei@cytonn.com
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How does liquidation impact clients who have already converted to Cysuites?
Cysuites clients form part of the creditors who have a claim on the Property.
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When will the Ridge be completed?
Construction of the Ridge is expected to commence once the Alma is completed i.e. approximately two quarters after the DSP is approved.
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What will it absolutely take to lift the preservation order on Cytonn Real Estate?
A positive ruling on the stay application and/or Appeal by the High Court and Court of Appeal respectively.
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If I would want to convert my portfolio to a plot in River Run can the terms be made friendly?
Due to the ruling delivered by the High Court in Insolvency Cause E063 of 2021 and Insolvency Cause E064 of 2021, Riverrun is under preservation and thus no transfer can be done.
Cytonn Investment Products
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SEIP was not amongst the troubled products so what is the way forward for SEIP
investors?
We have engaged all our SEIP clients and we have a repayment plan which both parties agreed and we have already started funds disbursement.
Cytonn Litigation.
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Will Cytonn withdraw the court processes it has lodged on some investors as a way forward?
All Court processes lodged by Cytonn were done in a bid to protect the brand’s brand and reputation.