Real estate developer Home Afrika has acquired 40 acres of prime land in Isinya from its Chairman Linus Gitahi in a transaction whose actual value is yet to be determined, the home developer revealed during its latest annual report.
The developer’s deal with Mr. Gitahi, who joined the company in 2016 after leaving Nation Media Group a year earlier, was approved by shareholders last week during their annual general meeting hosted in Nairobi.
The details of the transaction were revealed to shareholders at the AGM in line with the Competition Act which decrees that shareholders have to sanction significant trades concerning non cash assets between a business and its directors.
“ To consider and if found fit, to pass a special resolution approving a substantial property transaction between the company and a director, Mr. Linus Gitahi in accordance with the provisions of Section 158 of the Companies Act 2015,” reads the report.
According to a news report by the Business Daily, Home Africa’s Chief Executive Dan Awendo insisted that the land acquisition would help overturn the home developer’s dwindling fortunes.
“This deal came to us to help Home Afrika at a most dire time when we had no cash flows and no sellable inventory to help us get the cash flows we needed,” Mr. Awendo is quoted as saying by the Business Daily.
In the year ended December 2018, the firm registered a 90 per cent increase in net losses which translates to the firm posting a Ksh. 346.2 million net loss in the period under review compared to the Ksh. 181.7 million registered in a similar period in 2017. Revenue collected from the firm’s contracts with customers similarly dropped to Ksh. 109 down from Ksh. 262.7 million registered in 2017.
The firm attributed the significant increase in losses to low uptake of its real estate developments as a result of strained credit in the private sector that has been fueled by the interest rate cap law. The rate cap law has made lenders shy away from offering loans, which on most occasions fund real estate unit purchases, to persons considered likely to default on the credit advance.
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