Acorn raises Ksh.2.5 billion funding as it lists Reits on NSE
Published on: February 24, 2021 09:16 (EAT)
Student hostels developer Acorn Holdings has raised Ksh.2.5 billion in new funding as it begins divesting its stake in the project. On Wednesday, the firm marked the listing of its two real estate investment trusts (Reits) on the Nairobi Securities Exchange (NSE) unquoted securities platform (USP). The entity behind the Qwetu students hotels has been keen on integrating new investors as it seeks to extend projects within the students’ accommodation space. In November last year, the firm acquired licensing to become a Reit manager by the Capital Markets Authority after converting its bond holdings into trade-able units. The conversion is aimed at providing investors with a more liquid avenue of trading and exiting from their holdings in the entity. “These Reits are projected to give long-term investors an 18 per cent return over a 10-year hold basis which is significantly above most of the securities available locally,” said Acorn Holdings Africa CEO Edward Kirathe. “We have given investors the opportunity to participate in development and investment returns alongside Acorn in a well-governed structure without taking on risks involved in direct real estate investing.” The firm which presently has Ksh.7.5 billion in assets under management (AUM) intends to infuse proceeds raised from the capital markets to increase its volume of projects to include rental housing targeted at young graduates and families. Acorn says it expects to retain a majority stake in the project by only divesting part of its holding. The Investment Reit (I-Reit) is meanwhile expected to list publicly over the course of the next two years. The firm has opted for an initial private placement as it eyes niche investors for its projects. Acorn’s current portfolio under the Qwetu Student hostels comprises of an estimated 3000 beds and is set to grow the count to 6500 beds in the near term. The USP-listed Reits are the first confirmed listings on the NSE private placement tab. Acorn became the first local outfit to list a shilling denominated bond on the London Stock Exchange (LSE) in January last year from where it raised Ksh.4.3 billion. Acorn is also the first entity to set up a student accommodation Reit on the continent. Treasury Cabinet Secretary Ukur Yatani lauded the move as a solution to affordable and sustainable housing. “The solution in addressing challenges within our universities is in our midst. People are willing and closely partner with institutions. The role of government is only to provide the necessary environment by giving incentives,” he said.