Centum Real Estate, a subsidiary of Centum Investment Company, has reported a net profit of Sh174 million for the fiscal year ending in March.
This marks a significant turnaround from the previous year’s restated net loss of Sh486.9 million. The company’s return to profitability was largely driven by a substantial unrealized gain on its investment properties.
The value of its real estate assets more than quadrupled from Sh513 million to Sh2.1 billion.
Centum RE attributed the property valuation gains to extensive infrastructural investments within its land banks and increased development activity by third-party developers.
Revenue from the sale of residential units also saw a slight increase, rising from Sh1.8 billion to Sh1.9 billion.
However, the gross profit from these transactions declined due to higher costs of sales, falling from Sh334.7 million to Sh285.6 million.
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The company completed 222 residential units that met the revenue recognition criteria during the fiscal year, out of a total of 895 completed units. It expects to book revenue and profit from the remaining units in the next financial year ending in March 2024.
Operating expenses for Centum RE surged from Sh502.1 million to Sh748.4 million, while finance costs rose from Sh794.7 million to Sh889.7 million. The increase in finance costs was primarily due to the depreciation of the Kenyan shilling against the US dollar, resulting in unrealized foreign exchange losses on USD-denominated liabilities.
Centum RE is currently selling both land and developed properties in Kenya and Uganda. During the review period, the company reported revenue from the sale of 222 units, down from 304 units in the previous year. Additionally, it has completed and sold another 342 units valued at Sh2.6 billion, with their revenue expected to be recognized soon.
Centum, listed on the Nairobi Securities Exchange (NSE), has been planning to sell shares in its real estate arm. The listing of Centum RE is expected to facilitate the sale of part of its interest to other investors. The company aims to reduce its concentration of assets in the real estate sector and redirect its cash into marketable securities and private equity. It has entered into an agreement with Luxembourg-based private equity firm GEM Global Yield to raise Sh17 billion in equity investment, with GEM taking a stake not exceeding 20 percent. The funds will be drawn down within 36 months after the listing.
