08 February 2023
Acorn Holdings Limited (AHL), East Africa’s largest institutional rental housing developer, together with Absa Group and Absa Bank Kenya, have announced the successful conclusion of a KES 6.7 Billion financing agreement to support the development of a further ten purpose-built student accommodation (PBSA) developments in Nairobi, Kenya. This will add another 12,000 beds to the Acorn Student Accommodation REITs to bring the total bed portfolio to 21,000 beds – the largest such portfolio in Africa.
Acorn, one of the pioneers of the Real Estate Investment Trusts (REITs) in Kenya, will be developing the student accommodation housing units over the next 3 years, in a move that contributes to the Kenyan 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 (IFC) EDGE, the internationally recognized green building certification system.
With the ten new facilities being located near universities such as Kenyatta University, JKUAT and the University of Nairobi, this transaction supports the growth of the continent by enabling a top tier development REIT to achieve its ambitions of placing more high-quality, sustainable, purpose-built student accommodation developments serving both public and private universities.
The Cabinet Secretary in the Ministry of Lands, Public Works, Housing, and Urban Development, Zacharia Mwangi Njeru congratulated Acorn and Absa for forging a partnership that speaks directly to the Kenya Government’s agenda of providing affordable yet decent housing to millions of Kenyans.
He said: “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 agenda and vision.
The Government is seeking to enhance its partnership with private sector players to speed up delivery of the agenda. We welcome Acorn Holdings Limited and Absa Bank Kenya Ltd. contribution towards this agenda through value addition and expertise as well as the financial commitment.
“I believe that the partnership between Acorn Holdings Limited and Absa Bank will significantly contribute to Kenya’s housing deficit, even as it provides solutions towards meeting the Country’s need for more, efficient, and affordable student housing."
Speaking at the same function, State Department for Investments Promotion Principal Secretary, Abubakar Hassan, encouraged greater participation of pension schemes for the affordable housing agenda to bolster funding for the initiative.
He said: “In terms of the funding program, we have a roadmap to deepen the capital markets through a responsive legal and regulatory measures. I would urge the pension schemes to also take part in this affordable housing agenda so that we can support the president’s initiative to mobilize pension capital to support the housing agenda.”
Speaking about the facility, Acorn Holdings Limited Chief Executive Officer, Edward Kirathe said:
“The facility we are unveiling today will provide a further 12,000 beds making the Acorn student housing portfolio the largest such portfolio in Africa with over 21,000 beds. The State Department for Housing has facilitated our registration under the AHP and is supporting us with the subsequent approvals for the projects we are financing with this facility. Our objective is to continue to align and contribute to the Affordable Housing Program with 70,000 student beds over the next 10 years.
“The new projects will offer high-quality student accommodation providing learners with access to resources and amenities that improve their college experience and access to tertiary educational facilities. With the deliberate efforts we have put into this program to ensure affordability, we are pleased to note its contribution to the Government’s affordable housing agenda and look forward to closer collaborations with the Government moving forward.
“This Kes. 6.7 billion debt facility from Absa Bank is part of a Kes. 11 billion financing package that Acorn has put together to finance 12,000 new beds that are affordable, of high quality, and safe. 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 Chief Executive Officer, Yusuf Omari said:
“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. Absa is committed to partnering on projects that help the youth of Africa to not only survive but thrive.”
Yusuf further explained that given the market demand fundamentals and the social importance related to housing on the African continent, Absa supports Acorn’s strategy to develop similar solutions in other cities and countries in Africa.
Somaya Joshua, Head: Commercial Property Finance (ARO), Absa CIB noted that “This deal highlights the structuring, project management, and collaborative capabilities of the bank and serves as a catalyst to the Absa Corporate and Investment Banking strategy to grow operations in key regions while also demonstrating our Sustainable Finance capabilities,” he explained.