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Companies

CIC sells 712-acre land as Sh5bn bond matures

Tom Gitogo
CIC Insurance chief executive Tom Gitogo. FILE PHOTO | NMG 

CIC Insurance is selling 712 acres of freehold land in Kajiado and Kiambu counties in transactions that are expected to earn it upwards of Sh10 billion.

The disposals come as the Nairobi Securities Exchange-listed firm prepares to redeem its Sh5 billion bond on October 2.

CIC has carried the land holdings at cost, meaning that the sale will result in substantial gains in line with appreciation of land value over the years.

Chief executive Tom Gitogo told the Business Daily that the company decided to sell the land parcels after abandoning its earlier plan to build properties.

"The property market has slowed down over the past two years so we decided not to be a developer ourselves," he said.

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"We have put the properties on the market and we will see if we can get a good price."

He added that the company would continue to hold the land if it does not get attractive offers.

Mr Gitogo said the CIC is ready to redeem its corporate bond but declined to give specifics of how it will fund the settlement of debt, including whether proceeds from the land sale will help in paying off the bondholders.

CIC has invited prospective buyers to acquire a total of 512 acres it holds in Kajiado. The company has three parcels of land in the vast county.

The company is also selling 200 acres in Kiambu. The CIC had earlier planned to use most of the land to develop residential units for sale.

Mr Gitogo did not say how much CIC expects to raise from the disposals but the insurer is expected to get more than Sh10 billion if it sells all the pieces, based on price estimates by real estate firms.

CIC’s corporate bond was issued on October 2014 and has a fixed interest rate of 13 percent per annum. Redemption of the bond will save CIC Sh650 million in annual interest expenses.

The company’s decision to sell the land comes at a time when demand for residential and commercial properties has slowed down, a trend that has partly been blamed on tighter credit markets.

Scores of property developers have reduced their asking prices in a bid to attract buyers, with others having their buildings and land holdings auctioned by banks.

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