Centum Investment Company #ticker:ICDC has repaid a Sh8 billion loan it took from Co-operative Bank to develop the Two Rivers Mall in Nairobi.
The Nairobi Securities Exchange-listed firm used a new loan from South Africa's Standard Bank to retire the Co-op Bank debt.
Centum says the finance costs on the Standard Bank loan are relatively lower than what it incurred on the Co-op facility, adding that this reflects the fact that the mall project is less riskier now than when the local lender first funded its construction.
Centum, for instance, gave Co-op Bank a guarantee at the parent company level to give comfort to the bank which was funding one of the biggest private sector projects in recent years.
Centum, however, did not disclose other terms of the debt including the interest rate charged.
"On the Two Rivers Mall, we had secured an Sh8 billion development finance facility with Co-op Bank for the then greenfield site," Centum's chief financial officer Samuel Kariuki told the Business Daily.
"Upon completion of construction and operationalisation of the mall, we sought to refinance the facility with Standard Bank into a corporate finance facility in which the Centum guarantee was dropped and the facility re-priced to reflect an operating business."
Centum’s effective stake in the mall stands at 29.1 percent, with the balance held by institutional investors including Old Mutual Property that were brought on board to help fund its construction.
The mall made a net loss of Sh3.4 billion in the year ended March, reversing a net profit of Sh915.8 million the year before. Centum says 78 percent of the space at the shopping complex has been taken up by tenants.
Performance of the mall is expected to improve in the coming years as the company builds apartments on the adjacent land, a move that will boost foot traffic to the various retail outlets.