Britam’s partner Acorn to put up Sh40bn property projects

Money Markets

 

Acorn Group chairman Antony Mwaniki (right) with CEO Edward Kirathe during a press briefing at the firm’s offices August 5, 2014. PHOTO | DIANA NGILA | NATION 

By John Gachiri

In Summary

• The firm is rolling out the projects with Britam, which has a 25 per cent stake.
• Each of the projects will be financed through different cash sources, with 60 per cent of the funding coming from commercial loans, 20 per cent through equity and the remaining 20 per cent from a mix of the two.
• The developers will sell some of the properties and package others into Real Estate Investment Trusts (Reits).

Acorn Group, a company partly owned by listed financial services group Britam, plans to develop real estate projects worth Sh40 billion over the next two years.

 

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The property management firm said the projects constitute a mix of shopping malls, commercial offices, residential properties and commercial hotels to be located within Nairobi and its satellite towns of Kitengela and Lukenya.

The firm is rolling out the projects with Britam, which has a 25 per cent stake.

Acorn chief executive Edward Kirathe said the partners are targeting the middle and lower ends of the property markets.

“The highest demand for property, especially retail and residential, is going to be in the middle and lower income segments. In the commercial space, it is going to be in suburb retail malls and shopping centres, the mid-scale business, conferencing hotels and mid-sized commercial office buildings,” said Mr Kirathe.

Each of the projects will be financed through different cash sources, with 60 per cent of the funding coming from commercial loans, 20 per cent through equity and the remaining 20 per cent from a mix of the two.

Mr Kirathe added that the developers will sell some of the properties and package others into Real Estate Investment Trusts (Reits).

Construction is expected to begin between October this year and March 2015.

Some of the major projects include Elono Plains, a residential estate in Kitengela that will consist of 600 housing units, a public transport terminus, a recreational park, clinic, shopping centre, primary and secondary school.

READ: Britam acquires 21-acre Ngong land to develop residential estate

Arboretum Square in Kileleshwa, Nairobi, will have a shopping mall and an office block.

Various property types have different returns, with residential estates on average having the highest at between 10 to 12 per cent.

Analysts said the project is significant for Britam though the impact on the bottom line will delay.

“The impact will be felt maybe between two-and-half to three years from now,” said Agnes Achieng, a research analyst at Sterling Capital.

Acorn’s expansion away from Nairobi is influenced by availability of bigger parcels of land and the growing demand for high quality housing in these regions.