Mortgage financier HF Group will exit the homes construction business once it completes the units it is currently building.
The move is aimed at reducing exposure to the real estate market that has slowed down considerably in the past few years.
The Nairobi Securities Exchange-listed firm will also free up substantial resources currently tied up in its property development subsidiary HF Development and Investment Limited (HFDI), which has some Sh1.2 billion of capital.
“We will complete the houses we are building this year and we will not start any new construction,” said Robert Kibaara, HF’s chief executive.
Most of the assets and liabilities of HFDI will be transferred to HFC Limited, another unit which offers banking services.
Mr Kibaara said the two subsidiaries have both been undertaking development and sale of properties and the transaction is meant to eliminate the duplication.
He added that HFDI will continue to hold some land and other properties. HFC will now have the sole mandate of marketing the houses in the company’s portfolio.
Mr Kibaara said that the company’s participation in real estate projects in the future will be through partnerships with other developers.
This marks the latest push to focus on the mainstream banking business while scaling down the real estate division.
HF rode the real estate boom that helped boost its net earnings to a high of Sh1.1 billion in the year ended December 2015.
Reduced demand for houses, increased defaults and the interest rate caps saw the company post a net loss of Sh598 million in the year ended December 2018.
The banking business is less cyclical but is increasingly being dominated by big banks operating on a large scale.