KENYA – Acorn Holdings Limited, Africa’s largest developer of Purpose-Built Student Accommodation (PBSA), has signed a US$180 million (KES23.6 billion) financing deal with the U.S. Development Finance Corporation (DFC) to develop affordable student housing in Kenya.

This financing facility, which marks Africa’s largest deal for affordable student housing, will bolster Acorn’s status as Africa’s premier PBSA provider by enhancing its affordable student housing portfolio and addressing the significant gap in quality student housing in Kenya. 

The funding will support the development of 35 new affordable student housing units in Kenya. These units will offer essential services and amenities at affordable monthly rates to students. 

Upon completion, these units will add 48,000 beds to Acorn’s portfolio, increasing its total offering to 69,000 beds and creating over 50,000 direct and indirect employment opportunities.

Up to US$90 million of the financing will be allocated to the Acorn Student Accommodation Development-Real Estate Investment Trust (ASA DREIT) for constructing the new PBSAs. 

This amount will be recycled twice during the loan term, facilitating up to US$270 million in financing through redeployment. 

The remaining US$90 million will be directed to the Acorn Student Accommodation Income-Real Estate Investment Trust (ASA I-REIT) to acquire stabilized Purpose-Built Student Accommodations from the DREIT. 

The financing will be repaid over 18 years, providing a long-term and sustainable financing solution for Acorn.

“We are immensely proud to be signing this landmark deal with the U.S. Development Finance Corporation for the expansion of our affordable student housing offering in Kenya,” Acorn Holdings Chief Executive Officer Edward Kirathe said.

“This deal allows Acorn to continue contributing positively to Kenya’s affordable housing agenda. 

“Being Africa’s largest-ever deal of its kind, it underscores Acorn’s commitment to developing and providing safe and affordable housing for students in Kenya while also highlighting the tremendous confidence the U.S. DFC has in Acorn and the opportunities in the country.”

Furthermore, Acorn will use the DFC financing to secure over US$380 million in Kenya Shilling equivalent, arranged by Stanbic Bank Kenya (part of Standard Bank Group). 

Additionally, the financing will attract over US$315 million (KES41.2 billion) from the Kenyan capital markets, including domestic pension funds and asset managers, totaling US$700 million (KES 92 billion) over the 18-year transaction period.

“As part of our sustainability program, all projects under this facility will carry the International Finance Corporation’s Excellence in Design for Greater Efficiencies (IFC EDGE) ADVANCED Certificate, contributing to a 40 percent reduction in energy and water utilization, as well as using materials with less embodied energy compared to conventional buildings,” Kirathe added.

The financing deal involves MIDA Advisors as the lead arranger and advisor, Stanbic Bank as joint lead arranger and lender, and Prosper Africa and USAID providing technical assistance support. 

Legal advisory services were provided by Morrison Foerster, HillStern & Morley, IKM Advocates, and TripleOKLaw Advocates.

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