Centum Real Estate Limited, a subsidiary of listed Centum Investment Company, is seeking to float a KSh 4 Billion bond to finance its ongoing housing projects.
The move is expected to ignite excitement on the fixed income securities segment of the Nairobi Securities Exchange (NSE).
Investors, who purchase the Centum Bond, will have the option of investing in an equity-linked component. This 3- year, zero-coupon bond will be issued at a discount rate, based on the prevailing rates on the three-year Treasury Bond, plus a market-determined margin.
The firm intends to use proceeds to finance the construction of its housing projects, made up of a series of middle and high- income housing units.
This bond, whose issue is planned to happen within the next few weeks, will only reflect on the books of the subsidiary and not on the listed parent firm-Centum Investments.
Investors have been assured that the bond is secured with deposit collections that have been channelled into a sinking fund- described as an innovative solution to protect bond holders’ money and finance the bond’s redemption.
“We have a receivable of KES 6.8 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 presold units”, said Samuel Kariuki, the Centum Real Estate Managing Director.
Centum Real Estate Limited is made up of Centum Group’s Vipingo Development Limited, Pearl Marina Estates Limited in Uganda, Uhuru Heights Limited in Nairobi and Centum Development Kenya Limited.
According to the Managing Director, Centum Real Estate Samuel Kariuki, all Centum housing projects are debt-free and funded using internally generated resources. Out of all projects under construction, Centum has achieved a pre-sale level of 75% and deposit collections of over KSh 2.6 Billion.
Centum Real Estate has approved a project pipeline of 4,426 residential units, with the first phase that comprises 2,000 units either under construction or pre-selling.
The firm recently handed over 96 high-income units erected on its Ugandan and Vipingo areas.
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