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 percent and deposit collections of over Sh2.8 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.
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.