Acorn Student Accommodation REITs announce a 5 percent dip in net profit

By Steve UMIDHA

Acorn Investment Management Ltd (AIML) has announced a marginal 5 percent drop in profit for the half-year ended June 2023 in comparison to the same period last year.

This is from Acorn Student Accommodation Development REIT (ASA D-REIT) and the Acorn Student Accommodation Income REIT (ASA I-REIT).

Together referred to as ASA REITs, the property has brought in a profit of Sh 283 million – a slight drop from Sh297million the entity announced in six months to June 2022. The property reported a growth in net earnings of Sh263 million in the same period a year earlier.

While making the announcement, the firm’s management attributed the consistent performance over the past three years on improving business environment this year, despite prevailing economic headwinds being faced by many industries, and “has demonstrated the resiliency of the Student Housing sector and bolstered the trust and confidence of investors.”

“In a challenging economic environment, the financial performance of the ASA REITs continues to showcase our commitment to delivering value to our investors,” offered the Managing Director of AIML, Raghav Gandhi.

Adding that, “Now with the continuing scale-up of the portfolio, the REIT Manager is finding new opportunities to reduce cost by benefiting from economies of scale, which should help sustain profitable growth into the future.”

This has led to an impressive 80 percent year-on-year increase in rights subscriptions by existing investors during the supplementary offers for both REITs in Q2 2023.

As the supplementary offers transition into the open market phase, the entity announced that it will welcome new institutional and retail investors (through Vuka) to this investment asset class.

Cumulatively, the ASA D-REIT’s profitability has witnessed remarkable growth, from Sh105 million to Sh 170 million – an increase in Net Asset Value (NAV) from Sh 5.6 billion to Sh 6.5 billion, while per-unit price has seen an impressive growth in profitability from Sh 23.87 to Sh 25.31 in the last year.

ASA REITs has also been certified as Shariah Permissible in a move that will see the property start attracting capital from Shariah investors.

“Following the Shariah Permissibility certification, we are pleased to be able to introduce to the Capital Markets this investment opportunity, given the dearth of options for Shariah investors. We look forward to their participation in our capital raising efforts,” confirmed Gandhi.

ASA D-REIT develops Purpose-Built Student Accommodation (PBSA), and has put up properties such as Qwetu Hurlingham; Qwetu Aberdare Heights II, and Qwetu and Qejani Karen. Notably, the rental revenue has demonstrated a positive growth trajectory, rising from Sh 139 million to Sh 162 million for the 6-month period ending in June this year compared to the same period last year.

With the ongoing sale of Qwetu Hurlingham and the planned sale of Qwetu Aberdare Heights II to the ASA I-REIT in Quarter 4, the ASA D-REIT is expected to pay its first dividend later this year.

The Acorn Student Accommodation D-REIT and I-REIT were launched on February 8th, 2021 and are listed and traded on the Unquoted Securities Portal of the Nairobi Securities Exchange.

REITs allow willing investors like you and me to invest in real estate without physically holding property and earn dividend-based income or capital gain in case the assets appreciate. Currently, there are 3 Capital Markets Authority (CMA approved) REITs: Fahari IREIT, Acorn ASA D-REIT, and Acorn ASA I-REIT.