Kenyan Purpose Built Student Association (PBSA) developer, Acorn Holdings has secured a USD 180 mn project fund from USA’s Development Finance Corporation (DFC), the largest student housing deal in Africa. The deal, which was signed in the recent Kenya-US Business forum, will see the developer construct 35 hostels worth 48,000 beds in the country, taking its total portfolio to 69,000 beds. Precisely, Acorn will use $90 mn to develop new PBSA projects under its development REIT (ASA D-REIT). The remaining amount will be utilized by its ASA I-REIT in the acquisition of hostels from the D-REIT, as well as securing over Kshs 50 billion ($380 million) in Kenya Shilling equivalent arranged by Stanbic Bank Kenya. Ultimately, the loan will be repaid in 18 years.

Notably, Acorn has 11 projects (12,000 beds-1,350 completed) under the D-REIT, and 7 projects (4,500 beds) under the I-REIT, all located within the Nairobi Metropolitan Area (NMA) under Qwetu, Qejani, and Palma brands. 

Featured Project: Qwetu Hurlingham

Location: Kilimani, Nairobi Kenya
Number of Beds: 832
Year Of Completion: 2021

Source: Estate Intel

Student Housing Yielding Better Results Compared To Other Real Estate Market Niches
In its FY:2023 financial results, the ASA I-REIT recorded an 8.2% rental yield, which was a 1.5% increase from the 6.8% realized in FY:2022. This was also higher than other real estate sectors in a similar period, boosting the market’s attractiveness to investors as indicated below: 

Source: Estate Intel and Cytonn Research

Acorn’s remarkable track record of timely green bond repayments also boosts its attractiveness and confidence among investors. According to the news released yesterday, the developer plans to repay its outstanding loan balance of Kshs 1.86 bn ahead of the scheduled maturity time, November 2024. In 2022 and 2023, the firm also exercised early redemptions of loans both worth Kshs 800 mn, maintaining its reputation of consistency and attractiveness to investors.

Estate Intel loves your feedback! Let the Insights team know what you think about Acorn’s mega financing by emailing insights@estateintel.com.

If you require a market study or research, contact our Capital Advisors team using capitaladvisors@estateintel.com.