Global Credit Ratings (GCR) conducted an assessment of Centum Real Estate’s (Centum Re) position as an issuer of long and short-term securities.
Subsequently, GCR assigned the issuer rating, assessing the company’s ability to fulfill its financial obligations.
Rating Improvements: Reasons Behind the Upgrade
The rating agency, GCR, has retained Centum Real Estate’s issuer rating at BBB+(KE) for long-term and A2(KE) for short-term securities. However, the outlook has been upgraded from negative to stable. This positive shift is attributed to several factors:
Factors Leading to Rating Improvement
- Improved Cash Flows and Reduced Debt: Centum Real Estate’s enhanced financial performance, marked by improved cash flows and reduced leverage on debt, played a significant role in the rating upgrade.
- Successful Project Delivery: The successful completion of eight out of 12 residential projects since the commencement of the development pipeline in 2019 contributed to the improved rating.
- Sales Performance and Earnings: GCR noted the continued growth in contracted sales and stronger than expected cash earnings, supporting the positive rating revision.
Ongoing Projects and Future Prospects
- Second Phase Expansion: Centum Real Estate launches 5 new projects, targeting 1000 annual off-plan pre-sales.
- Strategic Land Assets: Centum holds 6000 acres of serviced land in prime locations, ensuring sustained growth.
- Diversification Recognized: GCR acknowledges Centum’s efforts to diversify despite most projects being in Nairobi.
Centum Real Estate’s MD, Kenneth Mbae, credited the improved credit rating to the company’s punctual project delivery and customer satisfaction efforts.
- Sales Success: Second-phase projects achieved 2,069 unit pre-sales, constituting 75% of the total.
- Land Revenue: Centum generated Sh7.9 billion by selling 4,000 acres; the company has collected Sh5.1 billion.
- Financial Highlights: Centum’s 2023 net profit rose to Sh174 million from a previous loss of Sh486.9 million. Total assets grew to Sh46.3 billion, mainly from Sh31.5 billion in investment properties. Operating activities generated Sh3.3 billion in net cash.
Centum Real Estate’s upbeat credit rating revision and robust financial performance underscore its strategic initiatives, exemplified by successful project execution and astute financial management.
Consequently, these factors position the company favorably for sustained expansion within the real estate sector.
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