KENYA – Centum Real Estate, a wholly-owned subsidiary of Centum Investment Company Plc, has inked a US$20 million (KES2.92 billion) long-term loan agreement with the International Finance Corporation (IFC).
This financial backing is directed toward supporting the company’s affordable housing initiative, specifically targeting the Mzizi Court project at the Two Rivers Development.
Moreover, the project is set to obtain EDGE certification, adhering to green building practices aimed at reducing energy and water consumption.
While the IFC has yet to disclose the cost terms pending board approval, this marks a significant long-term debt funding opportunity not typically available in the market, given the perceived high risk of the housing sector for purely commercial investors.
The loan will contribute partially to the financing of the Mzizi project, which carries a total outlay of US$91 million (KES13.28 billion), according to IFC disclosures.
The remaining US$71 million (KES10.36 billion) will be internally funded by Centum Re through a mix of existing equity, buyer deposits or collections, and reinvested profits from completed units.
IFC’s proposed investment aims to support Centum Real Estate in developing 1,940 affordable housing units within the Two Rivers Development.
This strategic involvement from IFC is expected not only to validate the company’s efforts but also to attract more investors to Kenya’s affordable housing sector.
With Kenya facing a housing gap of over two million units and needing approximately 344,000 units annually to meet demand, the collaboration between Centum RE and IFC is perceived as the commencement of long-term work to address this shortfall, as articulated by Henrik Elschner Pedersen, Regional Industry Director – Manufacturing, Agribusiness, and Services – Africa.
Centum Re, managing a segment of Centum Investment Company’s real estate assets, is actively involved in land sales and property development in Kenya and Uganda.
In the fiscal year ending March 2023, the real estate arm reported a profit of KES174 million (US$1.2 million), a significant turnaround from the restated net loss of KES486.9 million (US$3.34 million) the year before.
This remarkable profitability rebound was largely fueled by substantial unrealized gains on investment properties, soaring to KES2.1 billion (US$14.4 million) from KES513 million (US$3.5 million).
Moreover, revenue from the sale of residential units rose to KES1.9 billion (US$13 million) from KES1.8 billion (US$12.3 million). Despite this, the firm sold 222 units during the review period, down from 304 units a year earlier.
Centum’s recent acquisition of a special economic zone (SEZ) license covering more than half of the Two Rivers Development positions the company favorably to leverage the SEZ’s business-friendly regulations.
This strategic positioning aims to attract global service firms and encompasses Grade A office spaces and housing projects such as Mzizi Courts, Riverbank, Cascadia, and Lofts.
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