Acorn student hostel REITs triple profit to Sh1.4b in 2024

L-R - Acorn CEO Edward Kirathe,Zacharia Mwangi Njeru CS Ministry Of Lands Public Works Housing and Urban Development & Absa Bank Managing Director & CEO Yusuf Omari during Acorn & Absa bank affordable housing partnership on 8th February 2023. Wilberforce Okwiri,Standard]

Acorn Investment Management Ltd (AIML) has announced a 200 per cent growth for the year ending December 31, 2024, for its  Acorn Student Accommodation Development Reit (ASA D-Reit) and Income Reit (ASA I-Reit).

The two Reits recorded a year of strong performance, posting a net profit of Sh1.4 billion from Sh467 million in 2023, driven by a rebound in the ASA D-Reit’s profitability. Despite operating in a tough business environment, the ASA Reits have demonstrated resiliency.

Acorn’s combined portfolio of operating and development-stage student beds now stands at 21,000. Total assets under management (AUM) across the two Reits grew by Sh5.6 billion, reaching Sh26.4 billion, up from Sh20.6 billion in 2023, demonstrating sustained growth and investor confidence.

The  ASA I-Reit has surpassed Sh1 billion in annual rental revenue for the first time since its inception, supported by high occupancy levels and new acquisitions.

With plans to double its operating bed capacity by the end of 2026, the ASA I-Reit is well-positioned for sustained expansion and increased rental income.

“Despite macroeconomic headwinds, the ASA Reits continue to perform well due to strong underlying fundamentals. We are now focused on optimising debt costs – especially in the I-Reit, mitigating macroeconomic pressures, and expanding into other university towns in Kenya as part of our medium-term growth strategy,” said Acorn Investment Management Ltd Executive Director Mathew Maina.

“Sustained profitability and strong investor returns will be our top priorities as we scale our PBSA portfolio to meet the growing demand.”

Despite high interest rates in 2024, the firm said the ASA I-Reit was able to continue its distribution track record, declaring a total payout of Sh224 million for the year.

The final distribution marks the eighth consecutive payout since launch four years ago, reinforcing its continued ability to deliver consistent distributions to investors.

During the year, the I-Reit expanded its portfolio with the acquisition of Qwetu Aberdare Heights II, a 627-bed property valued at Sh1.5 billion, increasing total AUM to Sh11 billion. The Reits portfolio now comprises seven green-certified properties.

A key priority for 2025 is reducing the cost of debt to enhance investor returns. This will be achieved by refinancing high-cost debt with a combination of equity and more affordable, long-term facilities that preserve equity value and improve overall yield for investors.

The ASA D-Reit experienced a strong rebound in 2024, driven by the completion of its first fully originated assets, significantly enhancing portfolio value.

As a result, operating profit improved to Sh1.5 billion from Sh728 million in 2023, while net profit for the period rose more than tenfold to Sh840 million, up from Sh71 million in 2023.