Nairobi, Kenya. Centum Real Estate Limited has successfully raised KES 3 billion, at par value, from a project bond intended to finance construction of its ongoing housing projects. The bond, which closed on Wednesday this week, will pay investors a return of 12.5% for the plain vanilla bond and 12-14% for the Equity Linked Note.
The bond will be listed for trading on the Nairobi Securities Exchange once regulatory approval is secured.
The subscription level is 50% above the minimum target level of KES 2 Billion. Centum Real Estate Managing Director Samuel Kariuki noted that the company was seeking to raise KSh. 4 billion in total over the next three years to fund its ongoing projects. The minimum target raise in this issue was KES 2 billion against which the KES 3 billion was raised, exceeding the minimum target by 50%.
The bond is structured as a medium term note where the Company may opt to re-open the offer prior to maturity to raise subsequent tranches in line with construction funding needs which are spread out over a period of time.
The three-year paper matures on December 16, 2023.
The Corporate bond attracted a diversified investor profile from the banking sector, pension funds, asset management and individual investors.
“The Medium-Term Zero-Coupon Bond is the first such structured instrument to be issued by a corporate in Kenya and we are therefore pleased with the outcome, despite the very bearish corporate bond market, tight liquidity and a difficult economic environment. It is a huge demonstration of confidence in Centum RE and we are grateful for the confidence that investors have shown in us”, said Mr. Samuel Kariuki.
“Investors are now regaining confidence in the Corporate Bond market after the negative experience in 2019,” said Kabaki Wamwea, CEO of Private Wealth Capital, the Lead Arrangers of the Centum Real Estate Bond. “We expect trading to be vibrant in the secondary market given the attractive structure of the bond,” he added.
Centum Real Estate has a portfolio of 1,482 housing units under construction, out of which 1,202 units are already pre-sold. “Despite the economic slowdown caused by the Covid-19 pandemic, we have recorded over KES 1 billion in customer deposits collections since April 2020 and closed KES 3 billion in land sales” noted Mr Kariuki.
All customer deposits received from beneficiary projects post the bond settlement date will be channeled into a sinking fund over which bond holders have a fixed charge, an innovative way to protect bond investors.
Centum Real Estate completed and handed over two projects in Vipingo and Pearl Marina in Entebbe, Uganda in October 2020. The third affordable housing in Vipingo is due for handover in January next year