Two Rivers Development Limited (TRDL), a company partly owned by investment firm Centum #ticker:ICDC, is seeking to raise Sh2 billion through short-term debt to fund its real estate projects.
TRDL, whose other shareholders are Aviation Industry Corp of China (Avic), and the Industrial and Commercial Development Corporation, is issuing a one-year note with an interest rate offer of 14.5 per cent.
This return is slightly higher than commercial banks’ maximum lending rate of 14 per cent.
Chase Bank had approved a loan facility of unknown amount for TRDL before its collapse, but the property developer says it only managed to draw down Sh500 million.
The resultant deficit, coupled with Sh650 million in deposits that TRDL says, it has in the lender, has left it with a capital shortfall.
“It is this funding gap that has created the rare opportunity for investors to access a high-yield paper issued by TRDL that is fully guaranteed by the largest listed investment company in east and central Africa,” TRDL says in its prospectus.
Centum Investments, which owns 58 per cent of TRDL, will guarantee the note. TRDL owns the 102 acres of land on which the Two Rivers mall is built.
The retail complex, which was opened mid-February, occupies just 10 acres leaving a huge chunk of land available for other developments.
TRDL says the money raised will “fund construction of additional infrastructure” at the site, including luxury apartments and office suites. “The totality of TRDL was valued at Sh41 billion as at March 2016, representing an uplift of 41 times over the price paid for the land in 2011,” TRDL’s prospectus states.