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Mixta Real Estate Short Duration Bonds to Test Developer Amid Lockdowns

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With lockdowns enacted in Nigeria’s 2 largest cities that lasted up to 2months, home builders are being pushed to the brink because they can’t get enough cash flow from pre-sales of homes and land to cover their costs.

Mixta Real Estate Plc, formerly ARM Properties Plc., is a leading real estate development company in Nigeria that could be squeezed due to the coronavirus pandemic.

The company has a relatively good track record and diverse real estate portfolio, with operations spanning the residential, commercial, and retail sectors of the Nigerian real estate industry.

Mixta Nigeria says it has successfully delivered close to 3,100 real estate assets, comprising homes, plots and retail outlets to end-buyers.

Mixta Nigeria had shareholder funds of N67 billion at the end of 2018, one of the largest in its sector in Nigeria.

However, Mixta is particularly exposed on the short end of the fixed income curve with N17.5 billion in Commercial Papers due to be refinanced in 8 months.

Commercial Papers are a common form of unsecured, short-term debt issued by a corporation usually for immediate cash needs.

The firm made only N1.3 billion in net income in 2018, according to data from its financials.

Finance costs were however equivalent to N4.42 billion in 2018, while total borrowings stood at N43 billion at the end of the period.

Mixta also has the lowest rating among the 15 companies with commercial papers due in 2020. Meanwhile its business is highly exposed negatively to the fallout from the coronavirus.

Nigerian Corporates are set to refinance about $1 billion (N380 billion) of maturing debt by the end of 2020, according to data compiled by MoneyCentral as they increasingly rely on fixed income markets to cater for their financing needs.

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