Nairobi, Kenya. Centum Real Estate Limited, a subsidiary of the NSE-listed Centum Investment Company Plc, has opened a KSh4bn 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 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 has 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% and deposit collections of over KES 2.8 billion, 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.
“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,” said the Centum Real Estate Managing Director, Samuel Kariuki.
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 Sh35 billion balance sheet, will also have a green shoe option of taking up to KSh2 billion more if the bond is oversubscribed.
The bond will be secured by the projects, with deposit collections flowing into a sinking fund. All current Centum housing projects are debt free and are funded using internally generated resources.
Mr 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.
Global Credit Rating recently issued A2(KE) short term issuer credit rating for Centum Real Estate, with a stable outlook.
Centum Investment Company Plc this year paid off all its long-terms debts totaling KSh14.4 billion, 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.