Student housing in Kenya marginally lost traction in the first six months to June 2023 posting a drop in profits.

Acorn Investment Management Limited (AIML) financials show that the segment recorded a marginal five percent profit drop for the half-year compared to the same period last year.

This was majorly from Acorn Student Development Real Estate Investment Trusts (ASA D-REIT) and the Acorn Student Accommodation Income REIT (ASA I-REIT).

Both referred to as ASA REITs, recorded a profit of Sh283 million, a slight drop from Sh297million the entity announced in six months to June 2022.

However rental revenue has demonstrated a positive growth trajectory, rising from Sh 139 million to Sh 162 million for the 6-month period ending in June this year compared to the same period last year.

Acorn Managing Director Raghav Gandhi, said an improving business environment, amidst the prevailing economic headwinds being faced by many industries contributed to the results.

“In a challenging economic environment, the financial performance of the ASA REITs continues to showcase our commitment to delivering value to our investors,” said Gandhi.

The property reported a growth in net earnings of Sh263 million in the same period a year earlier.

He said with the continuing scale-up of the portfolio, they are finding new opportunities to reduce cost by benefiting from economies of scale, which should help sustain profitable growth into the future.

In the review period the firm posted 80 percent year-on-year increase in rights subscriptions by existing investors during the supplementary offers for both REITs in Q2 2023.

As the supplementary offers transition into the open market phase, Accorn announced that it will welcome new institutional and retail investors (through Vuka) to this investment asset class.

Cumulatively, the ASA D-REIT’s profitability has witnessed growth, from Sh105 million to Sh170 million, an increase in Net Asset Value from Sh5.6 billion to Sh6.5 billion, while per-unit price has seen an impressive growth in profitability from Sh23.87 to Sh25.31 in the last year.

ASA D-REIT develops Purpose-Built Student Accommodation (PBSA), and has put up properties such as Qwetu Hurlingham; Qwetu Aberdare Heights II, and Qwetu and Qejani Karen.

With the ongoing sale of Qwetu Hurlingham and the planned sale of Qwetu Aberdare Heights II to the ASA I-REIT in Quarter 4, the ASA D-REIT is expected to pay its first dividend later this year.

The Acorn Student Accommodation D-REIT and I-REIT were launched in February 2021 and are listed and traded on the Unquoted Securities Portal of the Nairobi Securities Exchange.

REITs allow willing investors to invest in real estate without physically holding property and earn dividend-based income or capital gain in case the assets appreciate.

Currently, there are three Capital Markets Authority (CMA approved) REITs: Fahari IREIT, Acorn ASA D-REIT, and Acorn ASA I-REIT.