This archive report was first published on 28 December 2019.
Housing Finance has announced the shutdown of its investment unit, HF Development and Investment Limited, in a move aimed at cutting losses and strengthening liquidity.
The decision was made in a regulatory notice, which stated that the development and investment division will now be handled by the parent company at the firm's headquarters at Rehani House.
According to the notice, the proposed transaction involves the transfer of business, various investments, and liabilities of HF Development and Investment Limited to HFC Limited, the parent company.
The move is aimed at 'strengthening the group's core activities in line with the group's current strategic direction,' the notice said.
HF Development and Investment was formerly known as Kenya Building Society and played a significant role in major housing developments in Eastlands, including Buru Buru and Komarock estates, in the eighties.
However, the fortunes of the investment division have dwindled in recent years due to a slowdown in the real estate sector, stiff competition from new market entrants, and a glut in both residential and commercial property.
HF Development and Investments Limited posted Sh172 million in losses in 2018, almost tripling the Sh60 million loss booked in 2017.
Despite this, Housing Finance has recorded mixed performance over the recent past, with the lender reporting Sh84 million in profit after tax in the nine months to September 2019.
However, analysts say the firm could be experiencing liquidity stress, with total assets standing at Sh57 billion against Sh46 billion in total liabilities.
On a positive note, the company announced the redemption of its Sh3 billion corporate bond issued in 2012 with a seven-year tenor that matured this year.
Published on December 28, 2019
