Aerial view of Migaa Golf Estate in Kiambu County It was billed as the first and largest gated community in Kenya, but over the years Migaa Golf Estate has faced significant challenges that mirror the upheavals tormenting the real estate sector.
Data from the latest annual financial report from Home Afrika, parent company for the Sh4 billion Migaa Golf Estate, indicate that financial woes worsened by the Covid-19 pandemic had cast fresh uncertainty on the project’s future.
According to the financials, Home Afrika missed repayments on its Sh500 million corporate bond due last year, even as the interest on the same keeps piling.
“During the year, the group was in default of covenants under borrowing agreements by non-repayment of the principal and interest,” stated the firm in the annual report.
“Borrowings from this institution amounted to Sh500 million as at the reporting date. Interest payable of Sh320 million remained unpaid as at December 31, 2020.” READ MORE
Home Afrika floated the five-year bond under private placement in 2014 at 17 per cent interest, pushing up the total debt to Sh820 million as at December 2020.
The company also owed Sh1.1 billion to commercial lenders including Sh908 million and Sh168 million to EcoBank Kenya and I&M Bank respectively as at the end of December last year, piling more pressure on management to either restructure the debt or find a strategic investor to ease the liquidity crunch.
EcoBank originally advanced Home Afrika Sh400 million more than five years ago to set up Moru Ridge Ltd, a subsidiary of Home Afrika that sought to develop 300 apartments on 14 acres of land within Migaa Golf Estate.
However, the project stalled in 2015 with cumulative losses amounting to Sh570 million, leading EcoBank to repossess the apartments to recover the loan.
The bank put up the property for public auction but failed to get a buyer with an offer that reflected the value of the property. The case is still ongoing.
Home Afrika Managing Director Dan Awendo told Real Estate that the company is in talks for fresh repayment plans on its corporate bond.“We are currently in discussion with the bond holders for a restructuring,” he said earlier this week.“The matter of EcoBank is still ongoing. The last time it was adjudicated in court EcoBank was directed to foreclose on the collateral at market value, which we were agreeable to.”Home Afrika remains optimistic that its financial position will improve once the group’s land […]