Property developer Acorn Holdings has increased the dividends payable to unitholders of its two real estate investment trusts (Reits) to Sh482.8 million from Sh192.48 million after declaring its first distribution from its development Reits.
The company’s financial report for 2023 shows that the Acorn Student Accommodation Development Reit (ASA D-Reit) made a maiden distribution of Sh240 million in December —equivalent to Sh0.91 per unit— even as its net profit fell to Sh71.6 million from Sh384.2 million in 2022 on account of lower fair value gains on its investment properties.
The company made the distribution from retained earnings, which fell to Sh1.09 billion from Sh1.26 billion as a result, with the 2023 net profit subsequently added into retained earnings.
The Acorn Investment Reit (I-Reit) meanwhile raised its total distribution for the year to Sh242.8 million, equivalent to Sh0.77 per unit, up from Sh192.5 million in 2022. Its profit fell to Sh396.1 million, from Sh504.9 million in 2022.
“The combined profit declined on the back of a spike in 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,” said Acorn in a statement.
Acorn is also working to replace the costly debt in the I-Reit with lower-priced debt.
The D-Reit borrows funds for specific projects and uses the proceeds of their sale to settle the obligations.
The income-focused trust meanwhile absorbs the hostels—which are held under the Qwetu and Qejani brands—from the development arm once they are completed, thereafter generating income from rent and utilities that are then distributed as dividends to Reit holders.
In 2023, the I-Reit acquired 830-bed capacity Qwetu Hurlingham from the D-Reit for Sh2.1 billion, bringing the I-Reit’s total assets under management to Sh9.2 billion.
At the close of the year, the D-Reit held one hostel, known as Qwetu Aberdare Heights II as an asset available for sale in anticipation of its sale to the I-Reit.
The D-Reit also acquired land in Nairobi CBD where it intends to put up hostels with a capacity of 2,400 beds, which will raise the value of its development portfolio to Sh11.5 billion.
In the Nairobi CBD, the developer expects to set up two separate units under the two brands on a piece of land, targeting institutions such as the University of Nairobi and the Technical University of Kenya.
