Acorn Holdings Limited – Africa’s largest developer of Purpose-Built Students Accommodation (PBSA)- has today signed a USD 180 million (Ksh.23.6 billion) financing deal with the U.S. Development Finance Corporation (DFC) for the development of affordable student housing in Kenya.
The signing, which was witnessed by President William Ruto during the U.S.-Kenya Business Forum hosted by the U.S. Chamber of Commerce at their headquarters in Washington D.C., becomes Africa’s largest affordable student housing deal.
This facility will further reinforce Acorn’s profile as Africa’s largest provider of PBSA by enhancing its affordable student housing portfolio and helping close the gap in quality student housing in Kenya.
Particularly, the financing will lead to the development of 35 new affordable student housing units in Kenya which will offer a package of key essential services and amenities at an affordable monthly rate to students.
“As part of our sustainability program, all projects under this facility will carry the International Finance Corporation’s Excellence in Design for Greater Efficiencies (IFC EDGE) ADVANCED Certificate -contributing 40% reduction in Energy and Water utilization, as well as materials with less embodied energy compared with conventional buildings,” said Acorn Holdings Chief Executive Officer, Edward Kirathe at the signing ceremony in Washington D.C. on May 24, 2024.
$90 Million for ASA DREIT
Upon completion, an additional 48,000 beds will be added to Acorn’s portfolio, taking the total bed offering to students in Kenya to 69,000 while creating over 50,000 direct and indirect employment opportunities.
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Up to $90 million will go to the Acorn Student Accommodation Development-Real Estate Investment Trust (ASA DREIT) for use in the construction of the new PBSAs.
This amount will be recycled up to two times during the term of the loan, facilitating up to $270 million in financing through redeployment.
The remainder of the funds totaling $90 million, will go towards the Acorn Student Accommodation Income-Real Estate Investment Trust (ASA I-REIT) to finance the acquisition of stabilized Purpose-Built Student Accommodations from the DREIT.
Repayment Plan
The financing will be repaid over a period of 18 years and shall provide a long-term and sustainable financing solution for Acorn.
Acorn will use the financing from the DFC to secure over $380 million in Kenya Shilling equivalent arranged by Stanbic Bank Kenya (part of Standard Bank Group).
Additionally, the financing will crowd in over $315 million (Ksh.41.2 billion) financing from the Kenyan capital markets, including domestic pension funds and asset managers, for a total blended financing of $.700 million (Ksh.92 billion) over the 18-year life of the transaction.
The financing deal involves MIDA Advisors as lead arranger and advisor, Stanbic Bank as joint lead arranger and lender, Prosper Africa, and USAID providing technical assistance support, and Morrison Foerster, HillStern & Morley, IKM Advocates, and TripleOKLaw Advocates as legal advisors.
