Centum Real Estate Division Gearing up for Shs 4 Billion Housing Bond
Centum Real Estate plans to issue a Kshs 4 billion housing bond as part of its expansionary plans. The issuance will be its first major borrowing since turning the division into a cash-generating unit in 2018.
Centum Investment one of the blue-chip companies listed on the bourse said that it is willing to take as high as Shs 16 billion should investor’s exceed the targeted sum.
Centum Real Estate Managing Director, Samuel Kariuki said that the bond will first be issued as a private placement but later floated at the exchange for trading.
“Proceeds from the bond will be allocated exclusively to the subsidiary’s ongoing affordable, middle-income and high-end housing projects in Kenya,” said Mr. Kariuki.
Mr. Kariuki said that the bond is undergoing regulatory approvals, with issuance expected in the coming weeks.
The housing bond issuance comes at a time the firm has approved a pipeline for 4,426 residential units with over 2,000 units being under construction and pre-selling.
Some of the noticeable real-estate firms under Centum Investment Group include Vipingo Development Limited at the coastal region, Uhuru Heights in Nairobi, Pearl Marina Estates in Uganda, and Centum Development Kenya Limited, Two Rivers Lifestyle Center, Riverbank Apartments, and Cascadia Apartments.
The bond will be secured by ongoing projects with deposit collections flowing into a sinking fund to protect bondholders and finance the redemption.
“We have a receivable of Sh6.8 billion from the sold units, which more than covers the bond redemption value. The bond is therefore a bridging finance solution to finance the construction of the pre-sold units,” said Mr. Kariuki.
Mr. Kariuki said that investors will buy the bond at a discounted rate of a three-year T-bond plus a market-determined margin.
“The zero coupon means that for the three years that the bond will be in place, it will not be paying any quarterly or half year interest. The income the investors are making is the discount that the bond will be issued at,” said Mr. Kariuki.