Acorn picks Nairobi’s Kijabe Street for new 2,400 capacity hostel project
Acorn Holdings CEO Edward Kirathe (left) and University of Nairobi Vice-Chancellor Stephen Kiama lay the foundation stone for the Qwetu and Qejani Chiromo Residences. FILE PHOTO | POOL
Property developer Acorn Holdings has opted for Kijabe Street to host its first student hostel facility in the Nairobi Central Business District, new disclosures show.
The company, which develops student hostels under its Acorn Student Accommodation Development Reit (ASA D-Reit), intends to put up a facility with a capacity of 2,400 beds on the property, targeting institutions such as the University of Nairobi and the Technical University of Kenya.
A Reit refers to real estate investment trust, a vehicle that allots units (shares) to investors seeking exposure to the property market.
In the Nairobi CBD, the developer expects to set up two separate units under its Qwetu and Qejani brands.
“The group is in the process of acquiring land for the development under Larch Properties LLP. The properties will be strategically located in Nairobi CBD along Kijabe Street,” said Acorn in its financial reports for 2023.
“As at December 31, 2023, the ASA D-Reit had made payment for the land, but the transaction had not been completed and has since not recognised the land as investment property.”
Acorn has been developing student hostels near major universities in Nairobi, targeting the high demand for quality facilities by students, with many institutions of higher learning suffering from a shortage of in-house accommodation.
The rental fee for Acorn’s student rooms ranges from Sh9,900 to Sh14,500 per month, depending on the amenities and size of the space.
The D-Reit borrows funds for specific projects and uses the proceeds of their sale to settle the obligations.
Acorn’s income-focused Reit meanwhile absorbs the hostels from the development arm once they are completed, thereafter generating income from rent and utilities that are distributed as dividends to shareholders.
The most recent property addition to Acorn’s I-Reit was the 630-bed Qwetu Aberdare Heights II near USIU, via a transfer from the D-Reit at a cost of Sh1.48 billion in December last year. In October, the I-Reit also acquired the 830-bed capacity Qwetu Hurlingham from the D-Reit for Sh2.1 billion. The latest two deals brought the I-Reit’s total assets under management to Sh10.68 billion.
