• The early redemption not only reflects the financial prudence on Acorn’s part, but also the robustness of the underlying portfolio that has enabled it to meet its obligations to investors.
• It also promoted co-investment opportunities with over Sh5.5 billion raised through the ASA REITs from local pension funds.
Acorn Holdings Limited (AHL) is set to complete the repayment of the Acorn Green Bond Medium Term Note (B2 rating by Moody’s) of Sh5.7 billion earlier than the official maturity date of November 8, 2024.
The balance of the principal of up to Sh2.7 billion will be paid back to bondholders together with accrued interest to the date of redemption in the first week of October 2024.
The Sh5.7 billion Green Bond program was the first Green Housing Bond in Africa, the first bond to be cross listed on the International Securities Market (ISM) of the London Stock Exchange (LSE) and at the Nairobi Securities Exchange (NSE) in 2020 and has been used to support the development of safe, affordable, decent and green purpose-built student accommodation (PBSA) for university students.
The early redemption not only reflects the financial prudence on Acorn’s part, but also the robustness of the underlying portfolio that has enabled it to meet its obligations to investors.
The Green Bond which was guaranteed 50 per cent on principal and interest by GuarantCo (A1 Stable), also saw AHL provide a corporate guarantee of the Notes. AHL, together with the Issuer and Project Entities, are also obligors under the terms of the Notes.
The Green Bond which was issued before the start of the global COVID-19 pandemic in 2019 reignited Kenya's corporate bond market and sparked the move towards development of certified green assets in the region.
It also promoted co-investment opportunities with over Sh5.5 billion raised through the ASA REITs from local pension funds.
Internally for Acorn, the bond catalyzed investment in the PBSA portfolio with a SH 6.7 billion green facility from ABSA, and an additional USD 180 million from the United States Department of Finance Corporation
The Bond which currently sits as a funding mechanism under the Acorn Student Accommodation Development REIT (ASA D-REIT) was used to finance the development of 6 PBSA assets and up to 7000 beds.
Of these, the largest of the properties are Ǫwetu and Ǫejani Chiromo which opened its doors to students in the month of August 2024 with a bed capacity of more than 2,500.
All the projects have been completed, with 4 have been transferred to the I-REIT and 2 going through stabilization. Acorn has successfully refinanced the bond to allow for their stabilization and subsequent exit into the I-REIT.
Beyond its impact on education through the provision of decent student housing, the Green Bond has also had a positive economic influence through creation of over 2,000 direct jobs, over 7,000 indirect jobs and induced over 10,000 jobs.
It also spurred the local supply chain in the construction industry and improved access to credit for small and specifically female-owned SMEs. The bond also helped develop green assets with onsite renewable energy installations which has reduced the carbon footprint.
Further, the properties located within walking distances from universities therefore reducing greenhouse gas emissions
The bond has received recognition from the Climate Bonds Initiative with all the developments being IFC EDGE certified and the funds achieving GRESB 4-star certification.
AHL has also been feted by IFC as an EDGE Champion in Africa for its commitment towards sustainability and green developments.
The Green Bond, which was oversubscribed during its upsizing in 2021 has seen investors receive over SH 1.4 billion in coupon payments to date on top of the principle.