Housing Finance rolls out Sh1bn project in Komarock

What you need to know:

HF is selling the houses off-plan at between Sh9.25 million and Sh10.5 million.
The new property development, called Komarock 5B, is expected to be completed in 2016.

Housing Finance has broken ground for its sixth housing project in Komarock estate worth over Sh1 billion ahead of its fundraising through a rights issue.

The mortgage financier is to build 115 four-bedroom maisonettes in the populous Eastlands estate and is already selling the houses off-plan at between Sh9.25 million and Sh10.5 million.

HF says it intends to raise an undisclosed sum from shareholders by March next year, signalling that it has ditched its planned issuance of corporate bonds worth a total of Sh20 billion.

“Plans are under way, subject to regulatory and shareholder approval, to undertake a rights issue in the first quarter of next,” HF’s chief executive Frank Ireri said in a statement. The money will be used to fund its expansion besides boosting its capital base.

The new property development, called Komarock 5B, is expected to be completed in 2016, Mr Ireri said.

“We have also started building a shopping mall in the area but details about this project will be disclosed at a later date. This is will be the first mall HF will be building,” he added.

The mortgage lender has already completed the sale of all 162 four-bedroom maisonettes in the Komarock 5A project, selling the units for between Sh6.9 million and Sh9.9 million.

In its results for the nine months ended September, proceeds of these sales partly boosted its “other income” which increased more than five-fold to Sh380.4 million.

Its net profit in the period rose 6.4 per cent to Sh719 million, helped by increased lending and lower interest expenses.

Its loan book grew to Sh43.2 billion in September, up from Sh35.2 billion in December and Sh33.4 billion in September last year.

This helped raise total interest income —including earnings on government securities—11.4 per cent to Sh4.5 billion.

HF also benefit from a 12 per cent drop in interest expenses to Sh2.1 billion as its strategy of mobilising cheap deposits started to pay off.

The interest savings came despite the lender raising its customer deposits to Sh33.1 billion in September, up from Sh26.5 billion in December and Sh25.9 billion.

HF recently ventured into asset finance, trade finance, and corporate banking which bring in relatively cheaper deposits besides generating interest and fees.