GROWTH

Acorn Student Accommodation REITs records Sh297m profit

ASA I-REIT dividend of Sh64 million declared.

In Summary

•The ASA D-REIT has built significant momentum with the portfolio comprising three operational properties, resulting in rental revenue of Sh139 million.

•A major contributor to this rental growth was the launch of Qwetu Hurlingham in January 2022, with 832 beds.

Qwetu student hostels/HANDOUT
Qwetu student hostels/HANDOUT

Acorn Investment Management Ltd (AIML) has announced a 13 per cent growth in profit for the half-year ended June.

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 297 million, in increase compared to Sh263 million same period last year.

Additionally, the ASA I-REIT continues to distribute consistent dividends to investors with the announcement of an interim dividend for the second consecutive year, and the achievement of another milestone through the acquisition of its first new asset since the launch in February 2021.

The ASA D-REIT has now built significant momentum with the portfolio comprising three operational properties, resulting in rental revenue of Sh139 million, compared to Sh11 million last year.

A major contributor to this rental growth was the launch of Qwetu Hurlingham in January 2022, with 832 beds, which within six months, ended the reporting period with an occupancy of 65 per cent.

The ASA D-REIT’s portfolio of projects under construction has gathered pace with significant progress achieved.

An additional four projects in Karen and Chiromo will break ground in the third quarter of 2022 having completed the pre-development planning.

Furthermore, an additional four projects at Hurlingham, Kenyatta University and Jomo Kenyatta University will break ground in the third quarter of 2022, having completed the pre-development and planning phase.

"And with the long-term business plan in mind, further site acquisitions are already in the pipeline to provide the ASA D-REIT with its continued growth potential," managing director of AIML, Raghav Gandhi, said.

As a result, the ASA D-REIT has seen a steady growth in its Net Asset Value (“NAV”) from Sh5.22 billion as at December 31, 2022 to Sh5.58 billion as at June 30 2022, which translates to a value per unit of Sh23.88.

In the first half of the year 2022, the ASA I-REIT has achieved a 33 per cent growth in its total turnover to Sh186 million and 29 per cent growth in net operating income to Sh120 million, on the back of rental escalations effected and strong occupancy.

The average occupancy of 85 per cent during the period was achieved despite university intakes being delayed due to the changes in KCSE dates occasioned by the Covid-19 pandemic.

The ASA I-REIT has recorded a total comprehensive income (including valuation gains) of Sh192 million against Sh149 million in 2021 (29% growth from last year), and so is able to announce the payment of an interim dividend of Sh64 million.

The ASA I-REIT has also successfully completed its first acquisition since launch of Qwetu Parklands (533 Beds) in June 2022.

This operating property, whose NOI will accrue to the ASA I-REIT from July 2022, closed H1 2022 with an average occupancy of 90 per cent.

The property is expected to bolster the ASA I-REIT NOI owing to its strategic location in Parklands and within proximity to key universities and tertiary institutions.

This acquisition continues the growth of the portfolio beyond the initial three seed properties with more acquisitions planned for the coming period.

"Our collective experience in real estate will ensure that we will continue to deliver above-average returns to the ASA D-REIT investors with the first exit of an asset planned in the next reporting period," Gandhi said.

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