Kenya: InfraCo Africa invests in student accommodation
InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has subscribed to the Acorn real estate investment trust (REIT) committing to support the delivery of affordable student accommodation in Nairobi. The $10 million (Kenyan Shilling equivalent) investment, made through InfraCo Africa’s dedicated investment vehicle, will enable Acorn to scale its business, building on the company’s track record of delivering purpose-built student housing in Kenya, and helping to mobilise local capital markets.
InfraCo Africa’s CEO, Gilles Vaes noted, “This subscription marks our first investment into affordable housing and I am delighted to take this step with Acorn, a well-respected developer of high quality student accommodation.”
As student numbers grow, Kenya is experiencing a chronic shortage of suitable student accommodation. Acorn is seeking to attract private sector investment from Kenya’s local capital markets in order to achieve its ambitious growth strategy. The company has launched two REITs – a Development REIT to support development of housing projects, and an Income REIT for operational housing blocks. Unlike traditional equity, REITs offer a tax efficient means of raising capital, enabling Acorn to achieve scale quickly. As an anchor investor into both REITs, InfraCo Africa’s involvement gave significant comfort to local private sector investors who were considering REITs for the first time and mobilised funds from local pension schemes, insurance companies and high net worth individuals.
Edward Kirathe, CEO of Acorn Holdings Ltd. said, “We are excited to be continuing to develop our Kenyan capital markets by bringing good quality asset-backed and regulated issuances to market that have attractive returns, strong international institutional backing and the highest standards of corporate governance. The lack of such issuances has meant there are very limited alternative investment opportunities in Kenya. We are extremely pleased that we also secured an anchor investor – InfraCo Africa – who invested $10 million in KES equivalent into the Acorn REITs.”
Delivered in two phases, the 11-block initiative will provide a total of 8,800 additional student beds over the next five years. The buildings will comply with IFC EDGE (excellence in design for greater efficiencies) standards for green building, building on the high standards developed to certify the first green bond in East Africa in 2019. By offering a range of accommodation types, Acorn will ensure that students with a range of income levels can access affordable housing. All students will have access to 24 hour electricity, wi-fi, clean water and sanitation as well as social areas and safe transport to academic institutions. Security will be paramount, with students accessing separate male and female accommodation using biometric cards.
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