Centum Investment Company and Mi Vida Homes are in a race to raise funds from the country’s first real estate asset-backed security in the private sector as the two firms grapple with the pressure of inadequate long-term capital that aligns with the reality of property investments.
An asset-backed security (ABS) refers to a financial instrument that is backed by a pool of income-generating assets, such as rental income from housing units, allowing both institutional and retail players in the capital market to invest and therefore deploy long-term capital into it.
The pioneer ABS was in July 2025 when the government raised Sh44.79 billion from debt investors who will be paid an annual interest of 15.04 percent from future revenues from the Talanta Stadium.
Centum and Mi Vida, which are major institutional real estate investors, say that a key challenge they are facing in executing housing projects at scale is in aligning what is predominantly short- to medium-term capital with typically long-term investments in property.
“From site acquisition to when proceeds from projects hit our income statement takes about four years. So, our income statement for 2026 is a reflection of the activities we engaged in four years ago, which is 2022. There is an opportunity in this market to develop financing products that are tailored to the nature of real estate’s operating model, and our markets are yet to mature to that level,” Mi Vida CEO Samuel Kariuki said.
While the government has been successful in issuing up to 30-year bonds, debt investors have preferred to lend on a shorter-term basis to the private sector through instruments such as bank deposits, commercial papers and corporate bonds maturing in less than 7 years.
“The expansion of this sector will require deployment of capital and, by and large, the capital available is short-term, and so you don’t have the luxury of borrowing for 15 years because what you are getting is three or four years’ money,” Centum’s CEO James Mworia said.
“Asset-backed securities are going to be a very effective tool of connecting long-term capital to housing and infrastructure assets provided those assets have reached cash generative status.”
Going the route of asset-backed securities would mean the two players design ways through which receivables from cash-generative properties are securitised and used to provide backing for instruments that then go to market in capital raising.
Real estate players have in the recent past been active in diversifying their capital-raising avenues, with issuance of Real Estate Investment Trusts (REITs) gaining popularity in the recent past.
In June, Centum’s affiliate Two Rivers International Financial Centre raised Sh3.99 billion through a green US dollar-denominated income REIT, registering a 103.3 percent subscription.
In January, Africa Logistics Properties (ALP) raised Sh4.5 billion through a US dollar-denominated REIT in a restricted issuance that registered 115.0 percent in overall subscription.
Both Centum and Mi Vida argue that adding asset-backed issuances will go a long way in further diversifying how players in the real estate sector can raise capital and address the mismatch between short-term capital and long-term returns.
“We are always thinking about this, and Centum is looking very closely at the asset-backed security space because today when you go to raise capital internationally, Africa is considered to be risky and that means we don’t have access to long-term capital,” Mworia said.
Mr Kariuki noted that Kenya has only seen budding examples of what could look like asset-backed arrangements, noting that the very lack of many issuers of this type of debt is a challenge to going big with such financing.
“The easiest form we have seen tending towards this is in the Tenant Purchase Scheme arrangements, but one could argue that they could have securitized that receivable,” he said.
“We have toyed with a product that says the developer originates the Tenant Purchase Scheme, but because they cannot hold that receivable on their balance sheet for long, they are allowed to securitise that. You realise that by the time it is a Tenant Purchase Scheme, the housing unit is ready, and one can securitise based on the backing of that housing unit.”
According to data from the National Bureau of Statistics, real estate accounts for 8.2 percent of the country’s Gross Domestic Product (GDP), placing the total market value at Sh1.43 trillion at December 2025.
The real estate sector registered 3.9 percent year-on-year growth in 2025, marking the third consecutive year of deceleration in growth momentum, having moderated from 7.3 percent in 2023 and 5.3 percent in 2024.
