Markets & Finance

PE Cytonn raises Sh1.4bn to finance real estate projects

Private equity firm Cytonn Investments has raised Sh1.4 billion in debt to fund its real-estate projects through a private placement.

Cytonn secured the funds through an offer in which it sold structured notes to foreign, local and institutional investors.

The firm also secured funding from Finnish investment firm Taaleritehdas.

“This demonstrates very strong investor interest in real estate and real estate-backed investments in the region because of the attractive risk-adjusted returns in real estate,” said Cytonn chief investment officer Elizabeth Nkukuu in a statement.

“Financing real-estate developments for us is a dual opportunity to earn attractive returns for our respective investors, and also to attract international capital, which is critical to financing our growing economy.”

She says investors who have taken up the offer want to get access to the sector that has consistently returned higher returns than the stock, bonds markets and other asset classes over the last decade, a trend that is likely to continue.

Data from property consultants Hass and Stanlib Investments shows that on average land prices in satellite towns appreciated by 6.17 times between 2014 and 2007 while prices in Nairobi suburbs increased by 5.59 times over the same period.

Cytonn declined to give finer details such as the interest rate, the loan term or specific projects that will be financed with the fresh capital citing confidentiality clauses. The private equity firm has in the past said the Ruaka area of Kiambu County is a sweet spot for developers.

“Research by our Real Estate Services team shows that Ruaka developments can deliver between 28 per cent per annum and 41 per annum, compounded, for completed units and development equity investments,” said a Cytonn report.

The firm is already investing in the area through the Ruaka Apartments development.

READ: Cytonn real estate fund seeks Sh10bn