Availability of long term funds aids contribution to the real estate sector -- Mixta MD
KOLA ASHIRU BALOGUN The managing director of Mixta Real Estate Plc has lauded the role played by the capital market in facilitating his company’s goal toward the development of the real estate sector.
According to Balogun the company which has been able to raise long term funds successfully from the capital market since 2017 has been able to deploy more funds into the production of affordable housing for Nigerians.
“We registered a N30 billion bond programme of which N4.5 billion was raised in 2017. In the next tranche of about N5 billion within this second series, we have two tranches, where the first tranche of about N3 billion that is guaranteed by Guarant-co and the second tranche is unsecured,”” Balogun explained.
He said the availability of the funds has been able to help the expansion plans of the company. “The key thing for real estate is to be able to attract long term capital. So what we have been able to do over the years is to make ourselves known in the capital market, and with the way we have been able to attract this funding we are now able to deploy more into affordable housing infrastructure which are more long term in nature,” he said.
Balogun alongside other management team of last week listed a N5.2 billion bond. The bonds raised in two tranches were N2,961,000,000, 16.50 percent Series 2, Tranche A Senior Guaranteed Fixed Rate Bond Due 2023; and N2,320,000,000 17.75 percent Series 2, Tranche B Senior Secured Fixed Rate Bonds Due 2023, under a registered N30 billion medium term note programme.
Speaking on the reality of how the operating environment has impacted business operation, the MD revealed that it has been a tough operating environment “but I believe that once we are able to release products that match the reality of time we will succeed.”
He said the company has been able to introduce a product in Edo state, Benin whereby homes are being sold for about N5.7 million per unit. He further disclosed that in Lekki, Mixta has been able to introduce a project where homes were sold for about N10 million. “These were all funded through the use of the bonds,” he said.
He noted that the company has been able to bring in a total capital of about N9.8bn into the real estate space, adding that the sector is in need of more solid institutions and businesses of scale, because to attack the issue of 17 million in housing deficit in the country as well as address it on a large scale.
On the company’s strategy, Balogun said the focus of the business is on affordable homes.
“When we focus on the population of Nigeria, we see the strength and big opportunity within the affordability space and it goes down from the middle income to lower than that. We’ve taken a strategy to focus our housing and development in that area. You wouldn’t see us do the luxury or premium type homes any longer and I think we have been able to do that successfully given the Benin project where we provided 1400 units.”
He noted that price and cost of building are some of the issues that affect the progress of the real estate sector but explained that Nigerians build more efficiently today hence the opportunity for developers such as Mixta to build functional spaces and minimise wastage.
“What has also helped is support from the institution that guaranteed our bonds and that’s why we could get an AA rating on them,’ he further said.