Acorn Holdings Limited (AHL) and Absa Bank Kenya have penned a Sh6.7 billion financing deal for construction of 10 Purpose-Built Student Accommodation (PBSA) in Nairobi, Kenya.
The deal will see Acorn Student Accommodation REITs develop 12,000 more beds bringing the total bed portfolio by the developer to 21,000 beds, the largest such portfolio in Africa.
Acorn, the region’s largest institutional rental housing developer and pioneer of Real Estate Investment Trusts (REITs) in Kenya, will erect the student hostels in the next three years.
Acorn says the move will support the Kenya Government’s affordable housing vision by tackling the current student housing deficit estimated to be 300,000 beds across in Kenya.
The developer says the new facility will be green buildings certified under the International Finance Corporation (IFC) EDGE, the globally accepted green building certification system.
The 10 new high-quality, sustainable, purpose-built student hostel accommodation will be located near universities including Kenyatta University, JKUAT and the University of Nairobi.
Lands, Public Works, Housing and Urban Development PS Zacharia Njeru noted the Acorn-Absa deal backs Government’s vision of providing decent affordable housing to millions.
“We welcome Acorn Holdings Limited and Absa Bank Kenya Limited’s Sh6.7 billion contribution towards this agenda through value addition and expertise as well as the financial commitment,” said Njeru.
He added, “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.”
Abubakar Hassan, PS State Department for Investments Promotion, encouraged pension schemes to also support the affordable housing agenda to boost funding for the initiative.
“I would urge the pension schemes to also take part in this affordable housing agenda so that we can support the Government’s initiative to mobilize pension capital to support the housing agenda,” said Hassan.
And Acorn Holdings Limited Founder and CEO Edward Kirathe thanked the Housing State Department for supporting registration and subsequent approvals for the projects 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,” stated Kirathe.
He added, “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.”
He says the Sh6.7 billion debt facility from Absa is part of a Sh11 billion financing package Acorn marshaled to fund 12,000 new beds that are affordable, of high quality and safety.
The student accommodation developer behind Qwetu Hotels plans to raise the balance from Equity contributed via the Acorn Student Accommodation REITs, which provide a capital markets solution to fund housing in Kenya.
“With a student housing deficit of at least 200,000 in Nairobi alone, the market is underserved,” said Absa Bank Kenya CEO Yusuf Omari.
Omari added, “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 assured Acorn it could count on the bank’s support for the housing developer’s strategy to construct similar accommodation solutions in other cities and countries in Africa.