Capital Markets

Investors convert Sh600 million Centum Re bond into apartments


Kenneth Mbae is the Managing Director of Centum Real Estate. PHOTO | POOL

A section of Centum Real Estate’s bondholders opted to be paid in the form of houses, helping the property developer to settle debt amounting to Sh600 million besides lifting sales in its projects.

The company made an early repayment of its Sh2.95 billion bonds on Friday, offering a mix of cash and houses to bondholders.

“About Sh600 million of the bond was settled by investors taking up units at our Riverbank and Loft Residences projects,” said Kenneth Mbae, the managing director of Centum Re.

Read: Centum Re raises Sh3.8bn from land sale

This indicates that bondholders with principal amounts of Sh2.3 billion were paid in cash.

The Riverbank apartments comprise one, two and three-bedroom units in the Two Rivers development complex. Loft Residences are four-bedroom duplexes and also form part of the mixed-use development.

The Riverbank apartments are priced from Sh15 million to Sh28 million, according to an earlier price guide which indicated that investors could get rental yields of eight percent on the units.

At the Loft Residences, units are priced from Sh37.5 million.

Centum Re paid its bond earlier by about three weeks compared to the scheduled redemption date of December 16, 2023.

The company says it had marshalled enough resources to redeem the debt earlier than expected.

Interest accrued on the zero coupon bonds was paid together with the principal as a lump sum, distinguishing them from normal bonds which typically earn interest semi-annually.

The three-year bond was floated in December 2020 in two tranches comprised of a Sh2.6 billion batch earning a fixed coupon (interest) of 12.5 percent and a Sh354 million lot with a variable return starting from 12 percent.

The project bond was issued to finance the construction of its ongoing housing projects, with the deposit collections flowing into a sinking fund.

Centum Re, a subsidiary of the Nairobi Securities Exchange (NSE)-listed Centum Investment Company Plc, raised the funds from a diversified investor profile including pension funds, asset managers and retail investors.

Read: Centum unit taps Sh2.9bn IFC loan for housing

Its parent firm says the bond payment will make it easier for the real estate subsidiary to attract funding in the future.

Centum Re posted a net profit of Sh174 million in the year ended March.

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