Housing Finance managing director, Frank Ireri said the projects target middle and lower-income borrowers. Photo/ Diana Ngila
What you need to know:
The Nairobi Securities Exchange listed mortgager will finance the construction of a mix of apartments, maisonettes, villas and a hotel in Nairobi from the cash.
Housing Finance managing director, Frank Ireri, said that the housing projects will be tailored for the middle- and lower income borrowers.
Some of the projects under construction in HF’s supply pipeline include Great Wall Apartments in Mlolongo, the 1 Red Hill villas, and the 54-room Red Crest Hotel.
Mortgage lender Housing Finance has lined up at least 11 real estate projects that will be funded through its Sh3 billion bond currently on sale.
The Nairobi Securities Exchange listed mortgager will finance the construction of a mix of apartments, maisonettes, villas and a hotel in Nairobi from the cash.
Housing Finance managing director, Frank Ireri, said in a presentation on Wednesday that the housing projects will be tailored for the middle- and lower income borrowers. “We have sweet spots and for us it is anything below Sh10 million,” said Mr Ireri.
Some of the projects under construction in HF’s supply pipeline include Great Wall Apartments in Mlolongo where 336 apartments are being developed at a cost of Sh500 million, the 1 Red Hill villas that will see 67 units constructed at Sh500 million and the 54-room Red Crest Hotel with a Sh147 million construction budget.
Other projects the firm has lined up include Everest Park, Gable Park, Delta Plains, Five Star Gardens, and Amara Park estates.
This is the second tranche of HF’s Sh10 billion medium-term note.
The first tranche in 2010 raised Sh7 billion, which was a 40 per cent over-subscription of the targeted Sh5 billion. The second tranche opened on Monday and will close next Friday, with listing of the notes on the NSE expected to be done from October 30.
The seven-year notes are being sold at a fixed return of 13 per cent, a premium above current treasury bond yields but a huge discount for the lender on the prevailing commercial bank rates.
Borrowers will be offered mortgages at fixed interest rates for the first five years of their loan term, said Mr Ireri. A sharp increase in interest rates towards the end of 2011 saw the average cost of funds for the lenders increase to the 20 per cent, rising above mortgage rates which were averaging about 14.5 per cent.
The HF medium term note will help to address the mismatch between the lending rate and the cost of funds.
“The yield is good and should help to stabilise the bank’s liabilities,” said Johnson Nderi, a research analyst at Suntra Investment Bank.
The IFC has also said that it is talking with HF to lend it $20 million (Sh1.7 billion) and Mr Ireri said that the firm is negotiating with another international lender.
