Home » Centum Real Estate Ratings Rise Due to Enhanced Cash Flow

Centum Real Estate Ratings Rise Due to Enhanced Cash Flow

Global Credit Ratings (GCR) has maintained Centum Real Estate’s issuer ratings for both long-term and short-term obligations at BBB+ (KE) and A2 (KE), respectively. Furthermore, the outlook for these ratings has improved from negative to stable.

An issuer rating reflects an evaluation of an entity’s overall ability to meet its financial commitments.

This upgraded rating can be attributed to the company’s enhanced cash flows, as Centum Real Estate establishes itself as a reputable name in property development, as well as a reduction in its debt leverage.

GCR has based this improved rating on Centum Real Estate’s successful completion of eight residential projects out of the 12 in its development pipeline since the initiation of the first phase in 2019.

According to GCR, the change in outlook and affirmation of the ratings are primarily due to the ongoing growth in contracted sales and stronger-than-expected cash earnings.

In its second phase, Centum Real Estate has introduced five new residential projects, with an annual target of 1,000 pre-sales units in the off-plan phase.

GCR also highlights that Centum Real Estate has access to sizeable serviced land parcels, totaling 6,000 acres as of the end of March, mostly located in desirable areas.

Additionally, GCR recognizes the company’s diversification of projects, even though the majority are situated in Nairobi.

Kenneth Mbae, the Managing Director of Centum Real Estate, views the credit rating revision as a testament to the firm’s growing reputation, emphasizing the company’s commitment to delivering housing projects punctually and within budget.

The momentum in residential sales for Centum Real Estate is expected to remain robust with the launch of second-phase projects, where cumulative unit pre-sales to date account for 2,069, or 75 percent of the total projects.

The company has successfully sold over 4,000 acres of land parcels valued at Sh7.9 billion and has received Sh5.1 billion from these sales.

Furthermore, the rating for Centum Real Estate’s Sh2 billion zero-coupon medium-term notes has also been upheld at BBB+ (KE).

For the fiscal year ending on March 31, 2023, Centum Real Estate reported a net profit of Sh174 million, marking a turnaround from a loss of Sh486.9 million in the previous period.

This positive result is attributed to a Sh2.1 billion fair value gain on investment properties during the year.

The company’s total assets at the end of the fiscal year increased to Sh46.3 billion from Sh40.8 billion, with the majority of these assets comprising investment properties valued at Sh31.5 billion.

In terms of cash generation, the net cash generated from operating activities during the period amounted to Sh3.3 billion, a significant improvement from Sh981.1 million in the prior period.