News Column

HF Arm Pursuing Six Fresh Joint Ventures

February 26, 2014

James Waithaka

Kenya Building Society, the developer arm of mortgage lender Housing Finance, is presently negotiating six joint ventures, three of which it hopes will crystallise this year.

The developer is already in two joint ventures two years into its revival after 13-year dormancy, raising HF's presence in the housing supply chain and boosting mortgage sales.

"We are negotiating about six potential joint ventures with big land owners and hopefully we'll close at least three in the course of this year," said Timothy Gitonga, HF's group business operations director.

The lender could not disclose the particulars on the joint ventures in the pipeline as yet, only saying they are "bigger" than the two it has entered into so far.

"The negotiations take a bit of time because they involve families, due diligence, and working on approvals," managing director Frank Ireri said.

HF's first JV was a Sh1.2 billion development in Riruta Satellite - christened Precious Gardens - sitting on 5.4 acres. KBS contributed equity of Sh186 million, with construction being co-financed by HF and pan-African housing lender Shelter Afrique. It will have 328 units of 1-3 bedrooms.

Kahawa Downs on Thika superhighway is the latest where it broke ground in November. It is valued at Sh1.5 billion and will offload 220 units of two- and three-bedroom. The homes are on offer for Sh5 million and Sh6 million respectively.

"This project is already more than 90 per cent sold-out in just over two months since we broke ground. This is testament of Kenyans' trust in us and the pent-up demand in the market," Ireri said.

The lender aims to be "a one-stop-shop" for housing solutions, he said, hence its involvement in the entire property supply chain.

KBS will break ground for a new development within two months on a 7.5-acre parcel of land in Nairobi's Komarock. HF has another 33-acre parcel in the same location and is drawing a master plan for development.

The mortgage lender said it has diversified its funding sources to include bonds and sovereign debt. It is preparing to offer the first tranche of a Sh20 billion seven-year bond approved by the Capital Markets Authority in November, which should be issued fully by 2016.

It has foreign currency loans from the International Finance Corporation (Sh1.6 billion) and London-based Ghana International Bank (Sh850 million).

Sovereign debt has enabled it to start lending foreign currency mortgages - euro, dollar and sterling pound - since last October.

"We have a pot of $30 million (Sh2.59 billion) just for foreign currency-denominated mortgages. We are lending both to developments and individuals and this has really struck a chord with foreign investors coming into Kenya as they are cushioned against currency erosion," Ireri said.

Under the new product, it has already lent $5 million (Sh431 million) to the Buffalo Mall Development in Naivasha and $10 million (Sh861.8 million) to a local private university. Another deal of $3 million (Sh258.5 million) is in the pipeline, according to Gitonga.

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Source: AllAfrica

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