Centum Real Estate has reported a significant turnaround, achieving a net profit of Sh174 million in the fiscal year ending March.
This marks a notable reversal from the restated net loss of Sh486.9 million recorded in the previous year.
The return to profitability was primarily driven by a substantial unrealized gain of Sh2.1 billion on its investment properties, representing a quadrupling from the Sh513 million in the prior year.
The property developer, a subsidiary of Centum Investment Company listed on the Nairobi Securities Exchange (NSE), attributed the gains to property valuation increases fueled by extensive infrastructure investments within its land banks and heightened development activity by third-party developers.
Despite the positive financial results, Centum RE noted a decline in gross profit from residential unit sales, falling from Sh334.7 million to Sh285.6 million due to higher costs of sales.
The company reported revenue from the sale of 222 units during the review period, down from 304 units in the previous year. An additional 342 units valued at Sh2.6 billion have been completed and sold, with revenue recognition expected in the near future.
Operating expenses for Centum RE surged to Sh748.4 million from Sh502.1 million, while finance costs rose from Sh794.7 million to Sh889.7 million.
The increase in finance costs was attributed to the depreciation of the Kenyan shilling against the US dollar, resulting in unrealized foreign exchange losses on USD-denominated liabilities.
Centum RE is actively selling both land and developed properties in Kenya and Uganda. Plans for the subsidiary’s listing have been announced by NSE-listed Centum, aiming to facilitate the sale of part of its interest to other investors.
Centum RE is set to raise Sh17 billion in equity investment from Luxembourg-based private equity firm GEM Global Yield, with the listing expected to streamline the investment firm’s ability to diversify its assets and direct cash into marketable securities and private equity.