HF backs Delamere shopping mall with Sh425m loan

Housing Finance has signed a Sh425 million ($5 million) loan to the upcoming Buffalo Malls in Naivasha, giving the pre-dominantly residential mortgage lender a piece of the pie from Kenyans’ rising shopping budget.
The loan makes HF the principal financier of the mall associated with the Delamere Family on whose land the 22,000 square metre shopping complex is being set up.

The first phase of the mall is expected to cost Sh700 million.

“It was a matter of opportunity. We have a pot of $30 million dollars accumulating from debts taken from international financiers,” said Housing Finance CEO, Frank Ireri.

HF has lately received Sh1.6 billion ($20 million) from the International Finance Corporation, the World Bank’s investment arm, and Sh850 million ($8.3 million) from Ghanaian International Bank last year.

The Delamere Family owns a 25 per cent stake in the mall, with British investors Lloyd Capital Partners, holding 75 per cent. The project marks a major financing opportunity for HF outside of residential properties.

The loan to Buffalo Mall investors will also be the first foreign currency denominated loan by the lender which has been seeking debt to help grow its portfolio.

READ: Delamere group to build Naivasha town’s biggest mall

Investors are seeking dollar-denominated loans to hedge from foreign exchange exposure. Mr Ireri disclosed HF was closing in on financing a university with a $10 million dollar loan.

“HF’s ability to sustain the high growth in the medium term will come from securing stable and optimum priced funds,” said Kestrel Capital.

In November, the lender received regulatory approval to issue a Sh20 billion bond. The management said it would issue the first tranche after the government sold its sovereign bond, a move expected to push down market rates.

HF also intends to issue a development REITs by end of year and is currently pulling together investors. A development REIT requires a minimum of seven investors. The lender is eyeing a REIT (capital raising option) to develop seven acres of its 40-acre piece of land in Komarock this year.

Commercial property has been performing well in the country, feeding on the appetite of the burgeoning middle class who prefer malls. Recent major constructions include Galleria Mall, Thika Road Mall and the on-going Garden City.

HF’s mortgage sales recovered last year up 48.6 per cent to Sh10.7 billion after a dip in 2012 caused by rise in interest rates.

The lenders loan book grew to Sh35.2 billion up from Sh30.3 billion resulting to a 33.9 per cent increase in profits after tax to Sh995.2 million.