Capital Markets

Acorn raises Sh2.1bn in undersubscribed Reit offer

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Qwetu Hostels in Nairobi developed by Acorn. FILE PHOTO | NMG

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Summary

  • This represented a subscription rate of 28.4 per cent, which the company says met its minimum success threshold of Sh754.4 million.
  • It is the latest Reit to be undersubscribed, indicating lukewarm enthusiasm for the emerging investment vehicles.
  • Ilam Fahari I-Reit, which offers investors income, raised Sh3.6 billion in November 2016 against a target of Sh12.5 billion.

Student hostels developer Acorn Holdings has raised a total of Sh2.1 billion from investors in its real estate investment trust (Reit) issuance, falling short of its target of Sh7.5 billion.

This represented a subscription rate of 28.4 per cent, which the company says met its minimum success threshold of Sh754.4 million.

It is the latest Reit to be undersubscribed, indicating lukewarm enthusiasm for the emerging investment vehicles.

Ilam Fahari I-Reit, which offers investors income, raised Sh3.6 billion in November 2016 against a target of Sh12.5 billion.

The offer was, however also deemed a success since it surpassed the minimum threshold of Sh2.6 billion. Fahari proceeded to list on the Nairobi Securities Exchange (NSE) where its units (stocks) are trading at a third of Reit’s book value of Sh20.86 per share.

Fusion Capital terminated its proposed D-Reit (which was to develop properties) in August 2016 after raising Sh873.8 million against the minimum target of Sh1.1 billion.

Acorn offered investors an opportunity to invest in two Reits –one focusing on developing student hostels and the other one offering investors income from completed units.

The I-Reit raised Sh1.4 billion while the D-Reit raised Sh641.5 million. Each of the vehicles received subscriptions from the same 22 accredited investors comprising institutions and high-net-worth individuals.

The offer was priced at Sh20 per unit. The minimum investment was set at Sh20 million which was to be spread into the D-reit (30 percent) and I-Reit (70 percent), meaning that one had to buy into both investment vehicles.

Both Reits will allow investors to trade their holdings on the Nairobi bourse’s over-the-counter (OTC) market.