Acorn, a prominent property developer, is embarking on a drive to secure Sh1.5 billion in funding by January 2024. This initiative aims to facilitate the expansion of its student hostel portfolio through contributions from current unit holders of its development Real Estate Investment Trust (Reit).
The latest semi-annual report from Acorn Student Accommodation (ASA) D-Reit outlines the commencement of the offer period with a rights issue. This phase successfully garnered Sh230.5 million in capital by the conclusion of June. These funds were then allocated towards ongoing projects, initial land acquisition deposits, and the various expenses associated with the fund.
Trading on the Unquoted Securities Platform (USP) of the Nairobi Securities Exchange, the ASA D-Reit observed a growth in the total units available, reaching 258.4 million units by June’s end, up from the previous 244.2 million.
Acorn expressed its satisfaction in the Capital Markets Authority’s (CMA) repeated endorsement of Acorn Investment Management Limited’s application. This application allows for the issuance of a supplementary offering memorandum, intended to raise capital for unit subscription in the ASA D-Reit. This year, the target for capital acquisition was Sh1.5 billion, with the offer period set to extend until January 2024. This extension is anticipated to greatly facilitate the acquisition of land parcels, in addition to addressing other financial requirements within the ASA D-Reit portfolio.
Operated as a Development Real Estate Investment Trust (D-Reit), this investment vehicle procures funds specifically for designated projects. The generated proceeds from sales or transfers are then utilized to fulfill the developer’s obligations within the Income Reit.
The Income Reit, with its primary focus on generating revenue, absorbs completed hostels from the development arm. It garners income from rent and utility payments, subsequently distributing dividends to Reit holders. The rental pricing for Acorn’s student accommodations varies between Sh9,900 and Sh14,500 per month, the range dependent on the amenities and size of the living space.
Currently, the D-Reit boasts four fully established properties under the Qwetu and Qejani brands: Qwetu Hurlingham (832 beds), Qwetu Aberdare Heights II (601 beds) situated close to USIU, Qwetu Karen (542 beds), and Qejani Karen (808 beds).
Further expansion is underway, with four more properties under development. The Qwetu brand encompasses two properties in Chiromo and near Kenyatta University, collectively offering 1,514 beds. Meanwhile, the Qejani brand has plans for an additional four properties located at Chiromo, Kenyatta University, Jomo Kenyatta University of Agriculture and Technology (JKUAT), and Hurlingham, projecting an impressive combined bed capacity of 5,763.
Download offer memorandum here
August 3, 2023
Delino Gayweh
Serrari Financial Analyst
photo source Google
