Acorn aims to raise Sh1.5 billion for student hostels expansion

Acorn's Qwetu Hostels in Nairobi's Ruaraka area. PHOTO | NMG

Property developer Acorn is aiming to raise Sh1.5 billion by January 2024 from existing unit holders of its development Reit for the expansion of its student hostel portfolio.

A semi-annual report on the Acorn Student Accommodation (ASA) D-Reit says the offer period started with a rights issue, which raised Sh230.5 million by the end of June, with the funds deployed towards ongoing projects, deposits for land acquisition and fund costs.

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The ASA D-Reit, which trades on the Nairobi Securities Exchange’s Unquoted Securities Platform (USP), saw a rise in the number of units in issue to 258.4 million by the end of June from 244.2 million previously.

“For the second successive year, the Capital Markets Authority (CMA) approved an application by Acorn Investment Management Limited to issue a supplementary offering memorandum with a view to raising funds for the issue and subscription of units in the ASA D-Reit,” said Acorn in the report.

“This year, the ASA D-Reit had a target of Sh1.5 billion. The offer period is to extend to January 2024. This will enable the ASA D-Reit to make significant strides in the acquisition of land parcels as well as in meeting other project costs in the ASA D-Reit portfolio.”

The D-Reit borrows funds for specific projects and uses the proceeds of sales or transfers to the developer’s Income Reit to settle the obligations.

The income-focused trust, after absorbing the hostels from the development arm once they are completed, generates income from rent and utilities that are then distributed as dividends to Reit holders.

The rental fee for Acorn’s student rooms ranges from Sh9,900 to Sh14,500 per month, depending on the amenities and size of the space.

The D-Reit has four properties whose set-up has been done, with another four in development under Acorn’s Qwetu and Qejani brands.

The four completed ones are Qwetu Hurlingham (832-bed), Qwetu Aberdare Heights II (601 beds) which is situated near USIU, Qwetu Karen (542-bed) and Qejani Karen (808-bed).

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It also has two properties in Chiromo and near Kenyatta University under development under the Qwetu brand with a combined bed capacity of 1,514.

Under the Qejani brand, the D-Reit has four properties in the pipeline at Chiromo, Kenyatta University, Jomo Kenyatta University of Agriculture and Technology (JKUAT) and Hurlingham, with a total bed capacity of 5,763.

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