Acorn Holdings Limited has released its H1:2023 results for Acorn Student Accommodation Income-REIT (ASA I-REIT) and Acorn Student Accommodation Development-REIT (ASA D-REIT). Precisely, the ASA D-REIT was established to serve as the investment vehicle for developing projects, and upon achieving reasonable occupancy rates, are transferred to the ASA I-REIT which holds the income-generating rental units on a long-term basis. Notably, in October 2022, the ASA I – REIT acquired the Qwetu Aberdare Heights I project from the ASA D – REIT, at a cost of $13.3 Mn. We have included a few highlights from the period under review below.

H1:2023 Key Highlights:

• February 2023: Acorn Holdings Limited and Absa Bank Kenya announced a partnership deal aimed at establishing 12,000 student accommodation beds in Nairobi, worth Kshs 6.7 Bn.
• March 2023: Acorn Holdings released its FY:2022 results, highlighting that the I – REIT recorded a 30.3% increase in profits to Kshs 504.9Mn, whereas the D – REIT realized a 50.5% decline in its profits to Kshs 384.2Mn.
• May 2023: ASA I-REIT paid Kshs 0.5 per unit as dividends to its shareholders, with regards to the 2022 financial year. 

As per the 2023 semi-annual results, Acorn D – REIT recorded a 61.6% increase in profits to Kshs 170.2 Mn in H1:2023, from Kshs 105.3 Mn in H1:2022. This was mainly driven by a 35.9% improvement in the operating income to Kshs 515.5 Mn, mainly emanating from a 36.5% improvement in the fair value gain on revaluation of investment properties to Kshs 328.5 Mn.

The I – REIT on the other hand recorded an 8.0% decline in performance to Kshs 113.3 Mn, from Kshs 123.2 Mn recorded in H1:2022. The decline was mainly fueled by a 109.8% increase in the total expenses to Kshs 242.5 Mn, majorly emanating from an increase in finance costs and administrative expenses to Kshs 45.6 Mn and Kshs 120.7 Mn, respectively, in H1:2023.

Source: Acorn REIT Report

Notably, the rental income for both the ASA I-REIT and ASA D-REIT improved by 74.8% and 16.6%, to Kshs 324.8 Mn and Kshs 162.0 Mn, respectively, from Kshs 185.8 Mn and Kshs 138.9 Mn recorded in H1:2022, respectively. The I – REIT’s large increase was mainly driven by a 4.5% rent escalation effected in April 2023, as a result of the rising inflation rate in the country.

• Breakdown of ASA I-REIT Portfolio:

Source: Acorn I – REIT Report

• Breakdown of ASA I-REIT Portfolio By Value:

Source: Acorn I – REIT Report

• Breakdown of ASA D-REIT Portfolio:

Source: Acorn D – REIT Report

• Breakdown of ASA D-REIT Portfolio By Value:

Source: Acorn D – REIT Report

Declaration Of Dividends

An interim dividend for the D – REIT was not declared, however for the I – REIT, a dividend of Kshs 87.0 Mn (Kshs 0.3 per unit) was declared with regards to the period under review, owing to an increase in distributable income by 26.3%. This is meant to be paid by 1st September 2023.

We maintain our view that the ASA REIT will continue making significant improvements in its activities and performance owing to the attractiveness of the student accommodation sector, which in turn drives return on investments. Moreover, ASA I – REIT is set to acquire two more hostels worth Kshs 3.5 Bn from the ASA D – REIT by the end of the year (Qwetu Hurlingham and Qwetu Aberdare Heights II). Consequently, its performance is expected to improve, while the D – REIT gets more funding for its projects.

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