Acorn to redeem Sh573 million bonds early

 

Property developer Acorn is set to redeem Sh573.4 million bonds under its Sh5.7 billion medium term notes programme early by January 5.

The bond was scheduled to be redeemed on November 8, 2024. The early redemption is tied to the completion and transfer of its student hostel next to USIU to its investment Reit (real estate investment trust).

“The redemption will be effected on or before January 5, 2024. The total amount of notes to be redeemed is Sh573,400,000 in the relation to Project 2 (USIU 4, Linden Properties LLP),” the developer said in a notice.

The project dubbed Qwetu Aberdare Heights II, has been transferred to the Acorn Student Accommodation Income Reit in a Sh1.48 billion deal.

"The Qwetu Aberdare heights II transaction is yet another significant milestone for Acorn that reinforces our commitment to providing quality student housing and also continues to cement our position as leaders in the purpose-built student accommodation sector on the continent,” Acorn Investment Management Limited Acting Executive Director Mathew Maina said.

“The track record of the ASA (Acorn Students Accommodation) Reits since inception has demonstrated the resilience of the sector and our business model as we continue to make our contribution to the economic growth of Kenya through this housing asset class.”
The transfer is set to lift the total asset value of the ASA I-Reit to Sh10.5 billion.

Meanwhile ASA Development Reit, which is the development vehicle, has a total asset value of Sh12 billion with 12 projects under development including Qwetu and Qejani Karen and Chiromo.

ASA D-Reit has declared its first ever dividend payout of Sh240 million to unit holders achieving a yield of 3.4 percent.

"The payment of the first dividend by the ASA D-Reit is a significant boost to returns of the investors who have placed their confidence in Acorn and this nascent asset class given the strong pipeline of projects under development, the ASA D-Reit expects to pay dividends to investors going forward," added Mr Maina.

The developer issued the Sh5.7 billion notes in 2021, deploying proceeds from the issue to fund its various student hostel projects across the capital.

So far, the developer has drawn down Sh4.2 billion from the notes.

The early redemption of the notes has been funded from the sale of similar completed student hostels which have also been transferred to its investment Reit.

In September for instance, the developer made an early redemption of notes worth Sh860.6 million where it utilized proceeds of the sale of a student hostel in Hurlingham.

The latest early redemption is expected to more than halve the outstanding value of the Nairobi Securities Exchange listed medium term notes.

September’s early redemption for instance trimmed the outstanding notes from Sh1.86 billion to Sh1 billion, while the new early redemption will further reduce outstanding notes to Sh426.6 million.

By KEPHA MUIRURI