Acorn Holdings, a student housing developer, on Friday announced that it will repay the remaining balance of its Sh5.7 billion corporate bond a month ahead of schedule.
The five-year medium-term notes, issued in November 2019, were due to mature on November 8, 2024, but the remaining balance of Sh2.69 billion will now be repaid on October 4, 2024.
The green bonds, held by Acorn Student Accommodation (ASA) Development Reit, paid investors a fixed rate of 12.5 per cent in annual interest, and their proceeds were drawn down over the period to fund the construction of homes in Chiromo, Hurlingham, Karen, Thika Road (USIU) and Madaraka.
“The notes will be redeemed for an amount equal to the face value of the notes, plus accrued but unpaid interest from the previous interest payment date until the early redemption date,” Acorn said in a filing.
“In connection with the early redemption, the bonds will be delisted from the fixed income securities market segment of the Nairobi Securities Exchange (NSE).”
Acorn did not disclose in the filing where the money is coming from to make the final early payment to bondholders. However, the company typically uses proceeds from the sale of homes in its I-Reit to pay off any debt that accrues while the units are being built.
Acorn typically finances projects with a mix of about 65% debt and 35% equity.
Previous redemptions under the bond program were financed through the sale of homes to the REIT.
The iREIT then generates income from rental and utilities, which is then distributed as dividends to iREIT holders. iREIT had a portfolio of seven hostels worth Sh10.3 billion in the six months to June 2024.
During the same period, ASA D-Reit owned 11 properties at various stages of development with a total value of Sh10.9 billion. These properties include two lodges in Karen under the company’s Qwetu and Qejani brands, which the company expects to sell to Acorn’s Investment Reit (I-Reit) by the end of the first quarter of 2025.
Acorn had previously revealed that it would not look to issue another corporate bond once the current note expires, due in part to the prevailing high interest rate conditions and the fact that the company had secured long-term concessionary financing from the US International Development Finance Corporation (DFC).
The $180 million DFC financing is the seed funding for a $700 million financing package over 18 years from local and foreign lenders.