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Acorn student accommodation REITs post a loss of Sh 635million

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Acorn Investment Management Limited (AIML) has announced a loss of Sh635Million for the year ended December 2023, despite more than doubling its total dividend payout for the year to KES 480 million compared to KES 192 million it paid in the previous year.

AIML runs two entities namely; Acorn Student Accommodation Development REIT (ASA D-REIT) and the Acorn Student Accommodation Income REIT (ASA I-REIT). The shared entities returned an operating income of KES 1.45 billion during the year under review, despite a combined dip in profit of KES 765 million last year from KES 1.4 billion a year earlier.

This was blamed on high interest rates, inflation driven increase in construction costs and the decision by the REIT Manager to provide a maintenance reserve for the I-REIT to support the long-term quality and value of the assets.

The maintenance reserve is a one-off provision to cover the entire portfolio and going forward will not have material impact whilst the impact of the rise in construction costs is now priced in the ongoing developments.

Acorn is also working to replace the costly debt in the ASA IREIT with lower priced debt.

The continued profitability of the ASA REITs despite the challenging operating environment continue to demonstrate the resiliency of the Student Housing asset class having achieved profitability in all the three years since launch.

The combined ASA I-REIT and ASA D-REIT portfolio of operating beds and those under development is now 17,000 beds, making Acorn the largest Purpose-Built Student Accommodation (PBSA) provider in Africa.

The two REITs now have a combined total Assets Under Management of KES 20.7 billion.

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