Centum Real Estate Limited has reported a consolidated profit of KES 650
million for the year ended March 31 2021, driven by profit from residential units, sales
development rights and gains on investment properties.
Centum Real Estate defied the Covid-19 pandemic to record residential unit sale deposits of
KES1.8 billion in the year, a 20% increase from KES1.5 billion recorded in the previous year.
In September 2020, Centum Investment Company Plc reorganised its real estate business by consolidating its entire real estate holdings, with the exception of its 58% interest in Two Rivers Development Limited, under Centum Real Estate Limited as the holding company. Centum Real Estate Limited is now the holding entity of four subsidiaries namely Vipingo Development Limited, Centum Development Kenya Limited, Uhuru Heights Limited and Pearl Marina Estates Limited, domiciled in Uganda.
“The effect of Covid-19 containment measures was an initial slowdown in residential unit sales in the first quarter of the financial year and operational disruptions in some of our sites, particularly in Uganda, but this changed in subsequent quarters and our average monthly cash collections have increased by 73% compared to the pre-Covid period,” noted the Centum Real Estate Managing Director, Samuel Kariuki.
Centum Real Estate completed the construction of two projects in Vipingo and Uganda, in addition to launching three new projects in Nairobi.
Two of the new projects attained the pre-set market validation threshold of 30% and their construction has commenced.
In the sales-led development model, Centum Real Estate seeks to pre-sell at least 30% of a project phase before ground-breaking.
Centum Real Estate had cumulatively sold 1,281 residential units with a total sale value of KES11.5 billion as at March 31 2021, representing 63% of the total units either completed, under construction or under market validation. “These sold units have a profit potential of KES 2.2 billion, which is expected to be booked progressively from the financial year ending 31 March 2022”, noted Mr. Kariuki.
KES 3.7 billion had been collected as cumulative deposits, with KES 7.8 billion being the cash due on the pre-sales. The deposits collected are accounted for as deferred revenue liabilities on the balance sheet, with the revenue being recognised in the income statement when construction is completed, the unit has been handed over to the buyer and is fully paid for.
“We expect the significant proportion of the KES 11.5 billion, together with new sales from the current projects, to be recognised progressively over the next two financial years,” added Mr. Kariuki.
In December 2020, Centum Real Estate raised a KES3 billion zero-coupon bond at a yield of 12.5%, which matures in December 2023. The bond proceeds were applied to two projects in Nairobi, namely Riverbank Apartments and Loft Duplexes. The Riverbank Apartments are on course for completion this financial year while the Loft Duplexes will be completed next financial year. Both projects have a sale value of KES 3.4 billion, of which units worth KES 1.9 billion, representing 56% of total sellable units, have been sold.
Centum Real Estate has an approved pipeline of 4,528 homes for development in Kenya and Uganda. Of these, 96 have been completed and a further 1,952 are either under construction or market validation.
“We are on course to completing construction of 524 homes in the financial year ending 31 March 2022 and a further 1,426 in the subsequent financial year. The revenue potential of this total pipeline is KES 17.9 billion, which can be expected to reflect in our income statement progressively from the financial year ending 31 March 2022,” stated Mr Kariuki.
The Group’s total assets amounted to KES 40 billion as at 31 March 2021, funded by shareholder equity of KES 23.4 billion and KES 6.7 billion in borrowings.