centum real estate limited investor briefing fy21

Centum Real Estate Limited

Investor Briefing FY21

2 July 2021

2

Agenda

Samuel Kariuki – Managing DirectorFY21 Business Overview

Solomon Nzomo – Corporate Finance ManagerFY21 Financial Review

Samuel Kariuki – Managing DirectorFY21/22 Outlook

Allan Mutuma - Deals and Transaction ManagerQ & A

Corporate Overview

4

Centum Real Estate LimitedOur Organization Structure

Centum Real Estate Limited is organized as a Holding Company for 4 subsidiaries, under one overarching brand.

▪ Wholly owned subsidiary of Centum Investment

Co. Plc (CICP)

▪ CICP reorganised its real estate holdings under

Centum Real Estate Ltd, as the HoldCo , excluding

Two Rivers

▪ Independent Boards and Management at both the

Holdco and subsidiaries

▪ Autonomous business, cash generative and able to

fundraise both debt and equity on the strength of

its balance sheet


Vipingo Development Limited

Pearl Marina Estates Limited

Centum Development Kenya Limited

Uhuru Heights Limited(4.4 acres)

100%

100%

100%

100%

- Pipeline of Residential units: 1,478Loft Duplexes, Riverbank, Elmer Kasarani, 365 Pavilion (apartments)

- Pipeline of Residential Units: 400 Cascadia Apartments

- Development Rights: 389 acres- Pipeline of Residential Units: 1,243 Mirabella Villas, Bella Vista Apartments, La Perla Bungalows, Riviera Townhouses

- Development Rights: 8,036 Acres- Pipeline of Residential Units: 1,407 Awali Estate, Palm Ridge Apartments

Centum Investment Company Plc

100%

5

Centum Real EstateBoard of Directors

William HaggaiRepresentative of Industrial

and Commercial Development Corporation

(ICDC)

James RuithaChairman & Independent Non-Executive Director

Dr. James MworiaDirector

Mary NgigeIndependent

Non-Executive Director

Dr. Moses IkiaraIndependent


Samuel KariukiManaging Director

Dr. Laila MachariaIndependent


Frank IreriIndependent Director

Chair – Audit and Risk Committee

Andrew MusangiDirector

6

Centum Real Estate Limited Our business | (i) Development and sale of residential infill projects; (ii) Master developer of large mixed-used developments, selling development rights to other developers

Distribution of our residential units pipeline by Geography:

• Kenya (Nairobi) – 41%

• Kenya (Kilifi) - 32%

• Uganda – 27%

Strong demand for homes across all our sites.

Geography: 5 sites in Kenya and Uganda Residential Product Mix: Pipeline of 4,528 units

High End5%

Mid Market37%

Affordable58%

▪ A higher weighting of affordable units has led to increasedinventory turn. We see this market trend being sustained

▪ Our home products range from single-family bungalows,maisonettes and villas, to mid-density and high density multi-family homes.

Retail Development Rights:

• Various products for single-family dwellers launched in the market recently: beach/lake front properties, controlled estate developments

Bulk Development Rights: Closed various transactions

• Various transactions closed in the year

Development Rights Product Mix: Retail and Institutional

7

Centum Real Estate Capital Efficient Business Model

7

Capital efficient land acquisition• Growth into new attractive sites through JVs with land owners• 2 JVs signed for a pipeline of 1,243 units.

Customer funded business model

• Mobilised KES 3.7 billion in deposits by 31 March 2021

• Sales-led development model requires 30% off plan sales before groundbreaking.

• Phasing of projects to achieve a faster inventory turnMarket led development model

8

Centum Real EstatePortfolio Review: Summary of Portfolio as at 31 March 2021

8

8

Vipingo Development

Limited

KES

13.2

billionNet Asset Value

Pearl Marina Estates

Limited

KES

9.1


Uhuru Heights Limited

KES

0.7


KES 23.1 billion KES 11.9 billion KES 2.0 billion

Tota

l

Ass

ets

Centum Development

Kenya Limited

KES

0.4


KES 2.5 billion

Total Assets

KES 39.5 billion

Total Net Asset Value

KES 23.4 billion

NAV per share

KES 242

GCR Rating: Short term issue rating: A3 | Long term issue rating of BBB+

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Centum Real EstatePortfolio Review: A robust profitability pipeline looking forward

9

9

▪ Revenue recognition criteria: unit completed, transferred to buyer and fully paid.

▪ Our book NAV does not include the profits realisable from the current pipeline of infill developments under construction or those already sold.

▪ We can expect this profits to be booked in our income statement progressively over the next 36 months.

Units Sale value

Cash Return

Potential

KES'Mn KES'Mn

Sold and booked in income statement 27 458 124

Sales in process / Pre-sales 1,254 10,998 3,355

Unsold inventory under construction 767 7,520 2,709

Total 2,048 18,977 6,188

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Centum Real Estate Development Manager for Two Rivers Development Limited

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Two Rivers Development Limited (TRDL) is a sister company | Business model is sale of development rights that has been replicated in other Centum RE’s mixed use developments | Development rights have a bundled value proposition for 3rd

party developers that save on cost, time and development risk

Mzizi Homes

• Development rights are bundled with regulatory approvals, common area open spaces, facilities andparking, power and water supply, security and paved road network

• Enforced development controls within the masterplan preserves the long-term value of the investment.• Shareholding in the Property Company which holds the common area land and common infrastructure.• Development rights lease is a bankable instrument that a developer can use to secure financing• The effective cost on a per square meter basis for a developer is reduced, increasing profitability

Value Proposition of Development Rights

Sale to 3rd Party Developers

Centum RE’s Development Manager Mandate with TRDL

• Centum RE is the development manager and project manager of TRDL’s flagship affordable housingproduct.

• The project has sold 160 units to date and mobilized KES 140 million in deposits since it’s market launchin January 2021.

• Centum RE is the lead sales agent of development rights within Two Rivers Development• Centum RE has purchased two development rights sites and validated the business model• As the lead sales agent, Centum RE has built a significant pipeline of transactions

Key highlights for FY21

1212

AWALI ESTATE, VIPINGO

Completed in October 2020

1313

Mirabella Villas, Pearl Marina, Uganda

Completed in October 2020

1414

Development rights sales

3rd Party Development | Vipingo: Food Factory

Broke ground in January 2021

1515

Development rights sales

3rd Party Development | Vipingo Leisure Centre

Ongoing construction

1616

Palm Ridge Estate, Vipingo

Now completed and on course for July handover

1717

Loft Duplexes at Two Rivers

Broke ground in November 2020

18

256 Elmer One | KasaraniOnboarding of Main Contractor and site handover in March 2021. Construction ongoing.

18

March 2021 May 2021

1919

Customer Open DayCascadia Apartments: Uhuru Heights

20

Centum Real Estate Digitizing to serve our customers better

20

Web-Commercehttps://centumre.co.ke/property-listing

Mobile Application

Property Listing Home Page

Buying a Unit from the Site

Home Page Customer Account

https://centumre.co.ke/property-listing

21

Centum Real EstateZero Coupon Bond

2

121

In December 2020, we raised a KES 3 billion zero coupon to fund construction of the ongoing residential projects

Nominal value

KES 2,957,900,000

Proceeds

KES 2,059,736,974

Bond value – 31 March 2021

KES 2,136,332,053

Project Allocation: KES'000

Riverbank Apartments 738,996

Loft Duplexes 1,320,741

Total 2,059,737

Allocated Project UnitsUnits

sold

Revenue from sold units

KES’000

Collections to dateKES’000KES’000

ReceivableKES’000

Value of unsold

KES’000Total

KES’000

Riverbank Apartments 84 41 917,123 (305,057) 612,066 961,860 1,573,926

Loft Duplexes 56 28 1,018,264 (177,717) 840,547 1,018,264 1,858,812

Total 140 69 1,935,387 (482,774) 1,452,613 1,980,125 3,432,737

Bond nominal value 2,957,900

FY21 Business Performance

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Centum Real Estate LimitedFY20-FY24 Business Plan

To monetise our landbank through infill

projects and maximise profitability per SQM

of development bulk.

To partner with landowners for development

of affordable housing on a joint venture basis

To monetise our land bank through sale of

development rights.

1. Infill Developments on our land 2. Joint Venture Developments 3. Development rights sales


▪ 3,274 approved with our land bank ▪ 1,478 units u/c and 1,042 sold (70%)▪ 66 units under market validation and 23

units sold (34%)▪ 100 units completed and 82 units sold

(82%)

▪ 2 JV agreements for development of 1,254 units,

▪ 284 units u/c and 93 units sold (32%)▪ 120 units under market validation and

41 units sold (34%)

▪ KES 4.4 Billion: value of bulk land sales to date. Some of the current retail land sales achieving a 10-15x to the book value

▪ Sales of KES 2.5 Bn booked in the income statement

▪ KES 2.7 Billion: Collections to date

Over the period to March 2024, we are pursuing a three pronged strategy, hinged on anchor residential infill developments on our land banks and on third party land. The Underlying themes in our residential projects are scale, market-derisking and capital efficiency & velocity

24

Centum Real Estate Residential Infill Projects - Unit Sales

63% of units under construction or market validation, with a value of KES 11.5Bn have been sold | KES 4.5Bn collected | KES 7Bn cash due on pre-sales (receivable) | Based on sales performance on projects launched in 2020, we see current trend in sales and

collections as sustainable.

` Full PhaseUnits u/c or

market validationCumulative

Units Sold % sold

High end 268 166 77 46%

Mid market 1,641 678 338 50%

Affordable 2,619 1,204 866 33%

4,528 2,048 1,281 63%

Nairobi 1,878 944 375 40%

Vipingo 1,407 514 483 94%

Uganda 1,243 590 423 72%

4,528 2,048 1,281 63%

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Centum Real Estate Residential Infill Projects - Deposit Collection

20% increase in deposits collected in FY21 | Average monthly collections up by 73% compared to pre-Covid period | KES 3.7Bn cumulative deposits at 31.3.31

Location

Deposits collected in

FY19


FY20


FY21Cumulative

Deposits

Projected Revenue of

units sold to date

Collectable Cash on pre-sales

% deposit collected of

revenue to date

Nairobi 62,647 379,088 559,053 1,000,788 5,413,012 4,412,224 18%

Vipingo 166,366 474,713 684,033 1,325,112 2,409,835 1,084,723 55%

Uganda 282,329 608,157 514,909 1,405,396 3,633,576 2,228,180 39%

511,342 1,461,958 1,757,996 3,731,295 11,456,423 7,725,127 33%

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Centum Real EstateSale of development rights

2

626

For the year ended March 2021, KES 2.2bn in previously recognised valuation gains were monetised

Completed sales

KES 2,466,301,450

Ongoing bulk sales

KES 2,012,942,000Ongoing retail sales

KES 667,431,000

New products

KES 3,150,000,000

1.0x to 6.0x

Number of times transaction price exceeds carrying value

1.0x to 74x

Number of times transaction price exceeds cost

The cumulative realised gains from the completed sales was KES 2,207,633,338. This monetised

the previously recognised valuation gains on the portion of the land.

Investing in our communities

28

Sustainably Investing in Our Communities

2

8

In the face of COVID-19 pandemic, each one us must play a

part in keeping ourselves safe.

Centum Real Estate supported the

communities around our developments.

29

Sustainably Investing in Our Communities Aligned to the SDGs

2

9

• Through Vipingo Development Limited, we have

established a Vocational Training Centre in Kilifi

County to equip the local community with relevant

skills required for to benefit from employment

opportunities.

• To date, 100 students have graduated from this

Center, of whom 80 are now in gainful

employment.

• 200 scholarships awarded to date in Vipingo

• Shortlisting of candidates for the next academic

year ongoing

• Additionally, we have put up new classrooms for

four schools: Makonde ,Timboni, Kadzinuni and

Mukwajuni Primary schools.

303

0

Sustainable Infrastructure | Vipingo: Desalination Plant

Financial Performance

32

Centum Real EstateConsolidated income statement

32 32

Completed Projects• Awali and Mirabella projects completed.

Revenue from 27/96 units recognised;

Development rights

sales

• KES 2.4 billion in development right sales

completed;

Finance costs• On shareholder loans and corporate facilities

Key Drivers of GrowthMar-21 Mar-20 % change

KES'000 KES'000

Residential units:

Revenue from sale of residential units 457,794 - 100%

Cost of sales (333,376) - 100%

Gross profit 124,418 - 100%

Investment income 1,400,756 3,921,836 64%

Other income 102,442 21,223 383%

Operating and administrative expenses (400,967) (496,692) -19%

Operating profit 1,226,649 3,446,367 -64%

Interest on 3rd party borrowings (402,602) (9,728) 4039%

Interest on shareholder loans (551,241) (486,236) 13%

Profit before tax 272,806 2,950,403 -91%

Profit after tax 650,404 2,296,853 -72%

Other comprehensive income, net of tax 515,058 456,130 13%

Total comprehensive income 1,165,462 2,752,983 -58%

33

Centum Real EstateConsolidated statement of financial position

3

333

Deposit Collection• KES 1.8bn collected during the year

• Average monthly collection up 73%

Ongoing and

completed

Projects

• Launch of new projects during the year

and completion of two projects;

Development

rights

• Master planned developments in Kenya

and Uganda

Debt Fundraising• Closure of zero coupon bond, equity

release and Cascadia project finance

facilities

Key Drivers of GrowthMar-21 Mar-20

KES'000 KES'000

Investment property 28,481,271 28,974,815

Inventory - completed units 874,434 -

Inventory - residential units under construction 5,731,611 3,281,415

Other assets 2,857,165 1,356,376

Cash and cash equivalent 1,637,944 493,666

Total assets 39,582,425 34,106,272

Deferred revenues 3,590,750 2,365,517

Borrowings 6,673,402 -

Other liabilities 5,939,027 6,028,101

Total liabilities 16,203,179 8,393,618

Net assets 23,379,246 25,712,654

Funded by:

Equity 16,557,956 15,392,494

Shareholder loans 6,821,289 10,320,159

Total capital employed 23,379,245 25,712,653

34

Centum Real EstateGearing analysis

3

434

Mar-21

KES'000

Borrowings 6,673,402

Cash and cash equivalent (1,637,944)

Net borrowings 5,035,458

Equity 23,379,245

Total assets 39,582,425

Net debt to assets 16.9%

Asset cover ratio 7.9x

FY21/22 Outlook

36

Centum Real EstateOutlook | FY21/22 (1/2)

36

Pipeline Quality

Development

Rights sales

▪ Healthy pipeline of development rights sales across our sites. KES 2.3 billion of sales where deposits havebeen collected had not met revenue recognition criterial at 31.3.21. We expect those sales to be booked in YEMarch 2022.

▪ We have recently launched new products under this revenue stream, targeting retail buyers for single-dweller development. The value of rights set aside for this product is KES 3.6 billion.

▪ Our current approved pipeline is 4,528 residential units with a revenue potential of KES 37.2 billion andprofit potential of KES 7.4 billion.

▪ Of the 96 units completed, profit from 69 units is expected to be booked in YE March 2022. We furtherexpect to complete construction and handover of 524 units in YR March 2022 and the booking of theprofits.

▪ The profit of c. 2Bn on sold units that had not met revenue recognition criteria together with the profit ofc. 1.4Bn on units u/c but not sold is expected to be recognised progressively over the next 36 months.

▪ Current sales momentum across all sites is sustainable and plays to our strengths.

OutlookPillar

37


37

Growth into new

sites

OutlookPillar

▪ Disciplined capital efficient approach land acquisition through JVs.

▪ We continue to screen JV partnership offers that we have currently received, as we build a new pipeline for our medium term.

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38

Thank You

9th Floor South Tower, Two Rivers, Limuru Road(Office) +254 20 2286000(Office Mobile) +254 709 902 000PO Box 10518 – 00100 Nairobihttp://www.centum.co.ke

centum real estate limited investor briefing fy21

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