ACORN student accommodation record Shs1.16 bn net profit

NAIROBI, Kenya March 31 – Acorn Investment Management Ltd [AIML] the entity behind Qwetu and Qejani student residences has announced Shs 1.16 billion net profit for its Real Estate Investments Trusts [REITS] in their first year of operation.

The Acorn Student Accommodation Development REIT [ASA D-REIT] recorded a net profit of Shs 776 million while the Acorn Student Accommodation Income REIT [ASA I-REIT] recorded Shs 387 million for the year ended December 31 2021 because of the net operating income wit valuation gains.

“A large share of the credit in this milestone will go to the launch investors who believed in us and became part of the journey. The significant progress made has seen a growth in the ASA D-REIT Net Asset Value [“Nav”] from Shs 4.21 billion when it was launched to Shs 5.23 billion at the end of the year denoting a 24.4 percent increase in NAV with the value unit appreciating from KES 20 per unit at launch to KES 23.84 per unit at the end of 2021,” said Edward Kirathe Chief Executive Officer Acorn.

Kirathe said ASA D-REIT now has 6,267 beds in the portfolio comprising 3,509 Qwetu beds and 2,758 Qejani beds and termed their input as the core foundation of the milestone.

ASA D-REIT launched with 3 seed properties and outperformed its targeted returns considerably by surpassing the occupancy and net operating income targets underpinning the resiliency of purpose-built student accommodation.

The average occupancy for the three ASA D-REIT properties for 2021 was 91 percent against the target of 70 percent in the investment plan resulting in  NET OPERATING INCOME OF KES 229 million against a target of KES 187 million.

The REIT Manager and trustee have approved the payment of the final dividend of Shs 106 million to Shs 0.64 per unit. This together with an interim dividend of Shs 63 million declared in July 2021 [Shs 0.38 per unit] has resulted in a full-year dividend of Shs 169 million.

The dividend yield equates to 5.4 percent and represents payout ratio of 93 percent which is 13 percent more than the regulatory requirement of 80 percent

The ASA I-REIT has grown its NAV from KES 3.3 billion at launch to KES 3.5 billion at the end of 2021 which translates to 4% increase with the value per unit ex-distribution appreciating to KES 20 per unit at launch to KES 20.80 per unit at the end of year 2021. It also has 1,773 Qwetu beds under its portfolio and expects to acquire new properties from the ASA D-REIT in 2022.

On releasing results, the Managing director of AIML Raghav Gadhi said, “The first annual result of ASA REITs marks a milestone for these investment vehicles. Despite the economic challenges faced during 2021, the positive financial performance of both REITs underlines the fundamental demand gap that exists in the purpose-built Student Accommodation asset class.”

Gadhi added, “ASA D-REIT is on track to achieve its long term return objectives while ASA I-REIT continues to outperform achieving a total return of 9.4% compared to target of 4.6% .

To enable the two ASA REITS continue their growth, the REIT manager has sought and received approval from capital markets authority for an additional primary issuance of upto KES 3.2 billion from April 2022. This will be made available for subscription to existing and new investors.