KENYA – Centum Real Estate Limited, a subsidiary of the Nairobi Securities Exchange -listed Centum Investment Company Plc, has opened a US$37 million project bond issue to finance its ongoing housing projects.
The subsidiary is the holding Company for the Group’s Vipingo Development Limited in the Kenyan Coast, Pearl Marina Estates Limited in Uganda, Uhuru Heights Limited in Nairobi and Centum Development Kenya Limited.
The Kenya’s Capital Markets Authority-approved paper opened on 13th November 2020 and is set to close on 2nd December 2020.
Proceeds from the bond will be allocated exclusively to the subsidiary’s ongoing affordable, middle-income and high-end housing projects in Kenya.
Centum Real Estate recently completed and handed over two projects to homeowners in Vipingo and Entebbe, Uganda and is currently constructing 1,454 housing units.
The projects under construction have achieved an aggregate pre-sale level of 75 percent and deposit collections of over US$26.6 million as per the company’s pre-sales-led development model.
In the last six months, the company has launched three new projects, including affordable apartments in Ruaraka and Kasarani and high-end duplexes at Two Rivers in Nairobi.
“The bond offers an opportunity for investors to get a piece of Kenya’s real estate pie without taking the risk of getting involved in actual development of the projects”
Samuel Kariuki – CEO, Centum Real Estate
The 3-year, zero coupon bond will be issued at a discount rate on the 3-year Treasury bond plus a market-determined margin.
Centum Real Estate which currently has a US$320 million balance sheet, will also have a green shoe option of taking up to US$18.3 million more if the bond is oversubscribed.
According to the company, the bond will be secured by the projects, with deposit collections flowing into a sinking fund.
Centum prides itself that all its housing projects are debt free and are funded using internally generated resources.
Centum Real Estate CEO Samuel Kariuki noted that the company has a dedicated team with a blend of experience and track record in project planning and development, executing conceptualized developments and delivering on return objectives.
Investors who invest in the bond will have an option of investing in an equity-linked component of the paper, opening a window for future ownership of housing units.
There are plans to list the bond on the Nairobi Securities Exchange at a later date, offering buyers liquidity on their investment with easier entry and exit options.
Centum Investment Company Plc this year paid off all its long-terms debts totalling US$132 million, in keeping with its strategy of maintaining a debt-free balance sheet.
Its subsidiaries have built a cash generating capacity to leverage their projects, on their balance sheet.
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