Centum Real Estate, a subsidiary of the NSE-listed Centum Investment Company, has opened a KES4bn project bond issue to finance its ongoing housing projects.

“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 KES35bn balance sheet, will also have a green shoe option of taking up to KES2bn more if the bond is oversubscribed.

The subsidiary is the holding Company for the Group’s Vipingo Development in the Kenyan Coast, Pearl Marina Estates in Uganda, Uhuru Heights in Nairobi and Centum Development Kenya.

The Capital Markets Authority-approved paper opened on November 13, 2020 and is set to close on December 2, 2020.

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% and deposit collections of over KES2.8bn, 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 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.

Global Credit Rating recently issued A2(KE) short term issuer credit rating for Centum Real Estate, with a stable outlook.

Centum Investment Company this year paid off all its long-terms debts totaling KES14.4bn, in keeping with its strategy of maintaining a debt-free balance sheet.

Its subsidiaries have built a cash generating capacity to leverage their projects, on their balance sheet.