Home Afrika signs expansion deal with Shelter Afrique

Newly listed real estate developer Home Afrika and pan-African mortgage lender Shelter Afrique have signed an agreement for construction of houses for the mass market in East Africa.

The deal is hinged on a relationship where Home Afrika, which develops houses, will leverage on Shelter Afrique’s continent-wide presence and deeper access to capital to build low-cost housing.

“They will primarily be giving us the finances to do the implementation for our ‘Go Africa Strategy’,” Dan Awendo, a director at Home Afrika, told the Business Daily in an interview.

Home Afrika has said that it plans to grow its property portfolio to Sh87 billion in the next five years, during which time it targets to expand to five countries.

“Through the company’s ‘Go Africa’ strategy, Home Afrika will be seeking to take advantage of the regional economic growth by expanding into Tanzania, Uganda, Southern Sudan, Ethiopia and Rwanda,” says Home Afrika’s listing statement.

Home Afrika has already applied to Shelter Afrique to fund some of its new projects but no deal has been sealed yet.

Shelter Afrique ordinarily finances up to 60 per cent of projects, while the developer raises the rest of the funding. Home Afrika’s listing statement says that the company has three new projects in the pipeline, including Kikwetu in Machakos County which will be an estate with 10,000 units targeting the middle and lower income bracket.

Lakeview Heights in Kisumu County and Llango in Kwale County are the other projects whose concept is to sell serviced plots and completed units targeting the middle and upper class.

Home Afrika which listed on the Nairobi Securities Exchange’s Growth Enterprise Market Segment on Monday has said that it will use the capital markets to tap funds for future expansion.

(Read: Home Afrika’s valuation doubles on debut at NSE)

In Tuesday’s trading, Home Afrika moved 500 shares at an average price of Sh25. The plan to go regional has recently gained traction with Kenyan firms. “We have started assembling a team to identify projects,” Mr Awendo said.

Shelter Afrique is planning to issue a Sh8 billion corporate bond in the Kenyan market over the next two years to raise more cash for financing projects.

The 44-member states that own Shelter Afrique agreed to raise the lender’s share capital to Sh39 billion from Sh13 billion after an annual general meeting held in N’Djamena, Chad held last month.

In Kenya, it has been targeting the middle and upper income bracket, but going forward, it will also go to the lower end of the market.