Centum Real Estate has sold land worth Sh3.8 billion to other parties to undertake specific developments within its project plans.
The company, a subsidiary of Centum Investment Company, sees the sale of its land holdings as a means of raising funds while also taking profits.
“As at March 31, 2022, the business had collected cumulative cash of Sh3.85 billion from sales of 2,197 acres … with a total sales of Sh4.9 billion,” the real estate firm said in an investor briefing.
“Sh1 billion being cash due from development right sales to be collected in the subsequent financial year."
The buyer of a development right acquires the land on which only a specified project –such as a school or warehouse— approved by local authorities will be implemented.
The real estate firm says it has added value to the development rights by investing in the necessary basic infrastructure.
“People are attracted to our land because of the planning and infrastructure we have developed including water,” said James Mworia, the chief executive of Centum.
“We acquired the land a long time ago so most of what we receive goes directly to our cash flows.”
Centum Re is selling development rights at its Vipingo Development, Pearl Marina (Uganda) and Centum Development Kenya projects. Most of the development rights have been sold at Vipingo where the company acquired 10,234 acres for putting up residential units.
The real estate subsidiary also collected Sh6.6 billion from advanced sales of 1,739 residential units across its operating businesses in the year ended March.
This was a jump up from 1,363 units sold the year before with total sales of Sh3.8 billion. The surge in land and house sales helped Centum Re to quadruple its turnover to Sh1.8 billion.
However, it registered a loss after tax of Sh31.9 million, reversing a net profit of Sh650.4 million in the same period last year.
The loss was partly caused by lower revaluation gains. Real estate was among the worst-hit sectors by the economic fallout from the Covid-19 pandemic.
Demand for land and properties declined significantly amid reduced investment inflows, household incomes, and corporate earnings.
Many landlords were also forced to reduce rental charges besides offering other incentives to their tenants.