Centum unit taps $20m IFC loan for housing
Thursday September 07 2023
Centum Re Managing Director Kenneth Mbae (2nd R) explains a point during a tour of a construction project at Two Rivers in March 2022. PHOTO | POOL
The International Finance Corporation (IFC) is proposing to lend Centum Real Estate $20 million (Ksh2.92 billion) towards financing the company’s affordable housing Mzizi Court project at the Two Rivers Development.
While the IFC did not disclose the cost terms of the loan, which is pending approval by its board, it noted that it represents long-term debt funding which would otherwise not be available in the market from strictly commercial investors as the sector is considered highly risky.
The loan will partially fund the Mzizi project whose total outlay is $91 million (Ksh13.28 billion) as per the IFC disclosures.
The balance of $71 million (Ksh10.36 billion) is funded internally by Centum Re using a mix of existing equity, buyer deposits or collections and reinvested profits from completed units.
“The proposed IFC investment is an up to $20 million A Loan to support Centum Real Estate, a wholly owned subsidiary of Centum Investment Company Plc, to finance its development of 1,940 affordable housing units in Two Rivers Development, a prime mixed-use urban node located within Kenya’s Diplomatic Blue Zone in northern Nairobi,” said IFC in its disclosure.
Read: Centum losses more than triple to $51m
“The IFC’s involvement will also offer a “stamp of approval” to the company and is expected to crowd in more investors to the affordable housing space in Kenya.”
Centum Re, the subsidiary through which NSE-listed Centum Investment Company holds part of its real estate assets, is currently selling both land and the properties it is developing in Kenya and Uganda.
The real estate arm reported a profit of Ksh174 million ($1.2 million) in the year to March 2023, reversing a restated net loss of Ksh486.9 million ($3.34 million) recorded the year before.
The return to profitability was largely helped by a large unrealised gain on its investment properties, which more than quadrupled to Ksh2.1 billion ($14.4 million) from Ksh513 million ($3.5 million).
The company’s revenue from the sale of residential units increased to Ksh1.9 billion ($13 million) from Ksh1.8 billion ($12.3 million).
The company reported revenue from the sale of 222 units in the review period, down from 304 units a year earlier.
Read: Centum Investments records $10m half-year loss
The real estate firm is also looking for a boost in sales arising out of the recent award of a special economic zone (SEZ) licence to Centum covering more than half of the Two Rivers Development in Nairobi.
The nod positions the company to ride on the business-friendly rules for SEZ-domiciled firms to attract global service companies.
The zone, in addition to 150,000 square feet of available Grade A office space in two blocks known as Trific North and Victoria Towers and the Holiday Inn Hotel, also incorporates its housing projects that include the Mzizi Courts.
Other housing projects covered by the SEZ are Riverbank, Cascadia and Lofts, but the Two Rivers Mall lies outside of the economic zone.