Acorn Holdings Ltd, through its subsidiary Acorn Investment Management Limited (AIML), has launched two Real Estate Investment Trusts (REITs) that will give institutional investors the opportunity to get into the lucrative student housing market. The Acorn Student Accommodation Development REIT (ASA D-REIT) and the Acorn Student Accommodation Income REIT (ASA I-REIT) are expected to give long-term investors a blended return of 18% on a 10-year hold basis.
Speaking at the launch of the REITs on 24th February 2021, National Treasury Cabinet Secretary Ukur Yatani underscored the importance of diversified investment opportunities to Kenya’s economy. “There is considerable need to utilize the appropriate capital structures to finance the development of rental housing in Kenya,” Mr Yatani said. “This has been done successfully in developed capital markets globally.”
He said the REIT investment vehicles would play a crucial role in helping the Kenyan economy and real estate sector get back on its feet after the COVID-19 disruption. The need for student housing is clear as Kenya has a median age of 18 years with 75% of the total population being under 35 years old. The country has approximately 550,000 students enrolled in universities against a bed capacity of 40,000 beds.
British High Commissioner to Kenya Jane Marriott, who also attended the launch, said affordable housing is critical in securing quality jobs and driving forward prosperity for all Kenyans. Ms Marriott said through this Ksh1 billion investment, the UK was supporting President Uhuru Kenyatta’s initiative to build affordable homes, giving nearly 10,000 Kenyan students the best chance to succeed.
“This is just one small part of our economic partnership with Kenya, to mobilise more private investment and help a clean and resilient economic recovery after COVID-19,” she said.
Mr Edward Kirathe, Acorn Holdings Ltd CEO, said the company is developing Kenya’s Capital Markets by bringing quality asset-backed and regulated issuances that have attractive returns, strong international institutional backing and the highest standards of corporate governance.
“The Acorn REITs are once again bringing a number of new firsts to our capital markets; first development REIT globally, first student accommodation REITs in Africa and first issuance to list on the OTC (over the counter) segment of the Nairobi Securities Exchange,” Mr Kirathe said.
Investors in the Arcon REITs include InfraCo Africa as anchor investor as well as local pension schemes, fund managers and insurance companies, who have invested in the two Acorn REITs.
InfraCo Africa’s CEO, Gilles Vaes noted the Arcon subscription marks its first investment in affordable housing. He said expanding Acorn’s student housing offering will support Nairobi’s university students to achieve their ambitions, underpinning Kenya’s future economic development under its Big 4 agenda. “As the anchor investor in the Acorn REITs,” Mr Vaes said, “our involvement will also strengthen local capital markets to support similar infrastructure initiatives in the future.”
Established in 2001, Acorn provides purpose-built student accommodation (PBSA) in East and Central Africa and 3,000 operating beds. In 2019, with the support from GuarantCo, Acorn raised the first Green Housing Bond in Africa which was subsequently listed on the Nairobi Stock Exchange and London Stock Exchange.