Centum Real Estate ratings up on improved cash flows

Centum CEO James Mworia

Centum Investment Group CEO James Mworia. Centum Investments. 

Photo credit: File | Nation Media Group

Centum Real Estate's rating as an issuer of the long and short-term issuer has been retained at BBB+(KE) and A2(KE) respectively by the Global Credit Ratings (GCR) while its outlook has been lifted to stable from negative.

An issuer rating is an opinion on an issuer's general capacity to fulfill its financial obligations.

The improved rating has been attributed to the company’s improved cash flows as Centum RE becomes an established brand in property development and reduced leverage on debt.

GCR notes the improved rating has been anchored on the delivery of eight completed residential projects out of 12 since commencing the first phase of its development pipeline in 2019.

“The change in outlook and affirmation of the ratings are underpinned by the continued ramp-up in contracted sales and stronger than expected cash earnings,” GCR noted.

In its second phase, Centum Real Estate has launched five new residential projects with off-plan pre-sales of 1000 units targeted annually.

According to GCR, Centum RE has access to sizable serviced land parcels which stood at 6,000 acres at the end of March this year with the holdings located in desirable nodes.

GCR also noted the diversification of the company’s projects even as the bulk of projects are located in Nairobi.

Centum Real Estate Managing Director Kenneth Mbae termed the revision of the credit rating as befitting to the firm’s growing reputation.

“Our commitment to delivering our housing projects on time and within budget has won the confidence of our customers and is reflected in our high rate of project pre-sales,” he noted.

Centum RE residential sales momentum is expected to remain strong with the launch of second phase projects where cumulative unit pre-sales to date stand at 2,069 or 75 percent of total projects.

The company has cumulatively sold over 4,000 acres of land parcels with a value of Sh7.9 billion and has collected Sh5.1 billion from the sales.

The rating of Centum RE Sh2 billion zero-coupon medium-term notes has also been retained at BBB+(KE).

Centum Real Estate's net profit for the year ended March 31, 2023, was posted at Sh174 million, reversing a loss of Sh486.9 million previously as the company marked Sh2.1 billion in fair value gain on investment properties in the period.

The company's total assets at the end of the year rose to Sh46.3 billion from Sh40.8 billion with the bulk being investment property at Sh31.5 billion.

Net cash generated from operating activities in the period stood at Sh3.3 billion from Sh981.1 million previously.