The International Finance Corporation (IFC) is suggesting a $20 million (Sh2.92 billion) loan to support Centum Real Estate in financing their affordable housing project, Mzizi Court, within the Two Rivers Development.
Although the specific terms of the loan remain undisclosed and await approval from the IFC board, it is worth noting that this funding represents a source of long-term debt that might not otherwise be attainable in the market from conventional commercial investors due to the perceived high risk in the sector.
This loan will serve as partial funding for the Mzizi project, which, according to IFC disclosures, has a total cost of $91 million (Sh13.28 billion).
Centum Real Estate will internally fund the remaining $71 million (Sh10.36 billion) through a combination of existing equity, buyer deposits or collections, and reinvested profits from completed units.
“The proposed IFC investment is an up to $20 million A Loan to support Centum Real Estate, a wholly owned subsidiary of Centum Investment Company Plc, to finance its development of 1,940 affordable housing units in Two Rivers Development, a prime mixed-use urban node located within Kenya’s Diplomatic Blue Zone in northern Nairobi,” said IFC in its disclosure.
“The IFC’s involvement will also offer a “stamp of approval” to the company and is expected to crowd in more investors to the affordable housing space in Kenya.”
Centum Re, the subsidiary through which NSE-listed Centum Investment Company holds part of its real estate assets, is currently selling both land and the properties it is developing in Kenya and Uganda.
The real estate arm reported a profit of Sh174 million in the year to March 2023, reversing a restated net loss of Sh486.9 million recorded the year before.
The return to profitability was largely helped by a large unrealised gain on its investment properties, which more than quadrupled to Sh2.1 billion from Sh513 million.
The company’s revenue from the sale of residential units increased to Sh1.9 billion from Sh1.8 billion.
The company reported revenue from the sale of 222 units in the review period, down from 304 units a year earlier.
The real estate firm is also looking for a boost in sales arising out of the recent award of a special economic zone (SEZ) licence to Centum covering more than half of the Two Rivers Development in Nairobi.
The nod positions the company to ride on the business-friendly rules for SEZ-domiciled firms to attract global service companies.
The zone, in addition to 150,000 square feet of available Grade A office space in two blocks known as Trific North and Victoria Towers and the Holiday Inn Hotel, also incorporates its housing projects that include the Mzizi Courts.
Other housing projects covered by the SEZ are Riverbank, Cascadia and Lofts, but the Two Rivers Mall lies outside of the economic zone.
