- This will add another 12,000 beds to the Acorn Student Accommodation plan
- The firm was the first company to float a green bond in Kenya in 2019 worth Sh5.7 billion
Acorn Holdings and Absa Bank Kenya have agreed to build 12,000 bed student hostels worth Sh6.7 billion in Nairobi.
This is expected to add to the Acorn Student Accommodation REITs bringing the total bed portfolio to 21,000 beds – the largest in Africa.
The firm will be develop the units over the next three years, contributing to the government’s affordable housing goals by addressing the current student housing deficit estimated at 300,000 beds across the country.
The new facility will also contribute both social and environmental positive outcomes as the properties being developed will be green buildings certified under International Finance Corporation's (IFC) standards.
Acorn was the first company to float a green bond in Kenya in 2019 worth Sh5.7 billion, with the first tranche issuance in October 2019 raising Sh4.3 billion.
It reopened and upsized the bond programme raising a further Sh2.1 billion, against a target of Sh1.4 billion, representing a subscription rate of 146 per cent.
The programme, partially guaranteed by GuarantCo, was cross-listed on the International Securities Market (ISM) of the London Stock Exchange, and at the Nairobi Securities Exchange (NSE) in 2020.
The Cabinet Secretary in the Ministry of Lands, Public Works, Housing, and Urban Development, Zacharia Mwangi congratulated Acorn and Absa for forging a partnership that speaks directly to Kenya Kwanza government's agenda of providing affordable yet decent housing to millions of Kenyans.
“The Government values this partnership, not just because of its fundamental economic benefits but because it also confirms that Kenya’s corporate citizens are building their business plans around our vision,'' Mwangi said.
Principal secretary, State Department for Investments Promotion, Abubakar Hassan encouraged greater participation of pension schemes for the affordable housing agenda to bolster funding for the initiative.
“We have a roadmap to deepen the capital markets through responsive legal and regulatory measures. I would urge the pension schemes to also take part in this affordable housing agenda,'' Hassan said.
According to Acorn Holdings Limited Founder and CEO, Edward Kirathe, the facility will provide a further 12,000 beds making the Acorn student housing portfolio the largest such portfolio in Africa with over 21,000 beds.
"Our objective is to continue to align and contribute to the Affordable Housing Program with 70,000 student beds over the next 10 years,'' he said.
The Sh6.7 billion debt facility from Absa Bank is part of a Sh11 billion financing package that Acorn has put together to finance 12,000 new beds that are affordable, high quality and safety.
"The balance of the financing will come from Equity contributed through the Acorn Student Accommodation REITs which are providing a capital markets solution to finance housing in Kenya.”
Absa Bank Kenya CEO, Yusuf Omari said that with a student housing deficit of at least 200,000 in Nairobi alone, the market is underserved.
"A D-REIT of this nature enables access to capital and an increased supply of purpose-built student accommodation while also providing amenities such as high-speed internet, study and recreational common areas,'' Omari said.