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Green Bonds and Development REITs in Nairobi, Kenya

Raghav Gandhi
Chief Investment Officer, Acorn Holdings Ltd.

Acorn Holdings Limited (“Acorn”) is a Kenya-based fully integrated real estate business – with in-house development, operations, and financing – specializing in purpose-built student accommodations in the country’s capital, Nairobi. With seven operational projects totaling more than 5,000 beds, Acorn is one of the largest real estate operators in Africa and is on track to double their portfolio over the next three years.

While the company is over 20 years old, Acorn has been able to fund its recent growth with two innovative new approaches to funding. In 2019, they were the first company to originate a “green bond” in Kenya, a $50 million, two-tranche, 5-year note that attracted a range of leading local and global capital providers to invest in Kenya’s housing market with environmental and sustainable goals in mind. In 2021, Acorn made news for another capital market first – launching two real estate investment trusts (REITs) that act as a ‘virtuous self-financing cycle’ – with the development or “D-REIT” acquiring land and developing new housing, and the investment or “I-IREIT” buying the operational asset as a long-term investment, thereby replenishing the D-REIT to go and buy more land and build more housing. The D-REIT was the first REIT of its kind in the world, as well as being the first student accommodation REIT in Africa and the first to issue on the OTC segment of the Nairobi Securities Exchange.

We learn more about Acorn, the Kenya housing market, and the two financing models in particular – the green bond and the REITs – with Acorn’s Chief Investment Officer, Raghav Gandhi, who is also the Managing Director of Acorn’s Investment Arm, Acorn Investment Management Limited.