NRZ REIT, to list on ZSE, targets US$8 million through an IPO.

NRZ REIT, to list on ZSE, targets US$8 million through an IPO.

Staff Writer

THE NRZ Contributory Pension Fund (NRZCPF) will list its Real Estate Investment Trust (REIT), known as Revitus, on the Zimbabwe Stock Exchange (ZSE) on December 15, 2023, becoming the second REIT list on the local bourse.

The Tigere REIT pioneered the listing of REITS in the market, but according to information, the Revitus REIT was the first to be listed five years ago and also became the first in the pensions industry.

The fund, managed and administered by Datvest, intends to sell a total of 121 378 791 units in the Revitus REIT at an offer price of $400 per unit to the investing public. The fund plans to list the REIT on the Zimbabwe Stock Exchange on December 15, 2023.

“We are confident that the real estate market will continue to retain value for investors in the face of uncertainties,” NRZCPF chairman Takunda Madanha said at the official launch in Bulawayo on Wednesday.

The IPO opens on November 16 and closes on December 7, 2023, and approximately US$8 million is expected to be raised at the close of the offer. The funds are meant for the renovation and revitalization of portfolio properties.

Madanha said the buildings under the first phase of the REIT portfolio are Africa House, Pioneer House, both in Bulawayo, and Atlas House, Charter House, and Electral House, all in Harare.

“We are going to renovate, repurpose, and realign the buildings. This is the first phase, and we are going to improve and add more buildings in the next stages as we aim to improve revenue generation,” he said.

He added that the central issue for the Pension Fund is to improve revenue generation and the welfare of members.

A REIT is a company that owns and typically operates income-producing real estate or related assets, for which units of an investment pool are created and sold to investors in the same way as company stock.

NRZCPF Principal Officer Patience Dhliwayo said the Fund, being the promoter of Revitus REIT, is proud of this achievement.

“As we look to the future, we are filled with optimism and excitement. The IPO of Revitus REIT opens up a world of possibilities, enabling us to expand our investment portfolio, explore new market opportunities, and enhance our service offerings to our members,” she said.

ZSE chief executive, Justine Bgoni, said as part of efforts to deepen the capital markets, it has undertaken a number of initiatives to support REITs.

He said these include the establishment of the REITs Association, led by Mike Juru, and continuous training.

“This is part of our efforts to broaden the securities offered to the market, and based on engagements with potential issuers, we have a pipeline of REITs that we want to list on ZSE.

“We are also lobbying with the government for tax incentives,” he said.

Bgoni said despite the challenging macroeconomic environment, the bourse is witnessing the growth of new products on the market.

“The Revitus REIT will become the second REIT on our exchange. The ZSE management and staff are currently working with various potential REIT issuers, and we look forward to it being the next source of new listings together with additional ETFs that will come onto the market,” he said.

He said the Zimbabwean capital markets have seen a growth in interest in the instrument, and the listing of the Revitus REIT is indeed a welcome development for the market.

“The benefit of REITs, especially to pension funds, can never be overstated and has many benefits that our pension funds can take advantage of, including a tax-efficient structure.

“The exemption from income tax is a major attraction to potential investors, and that increases investment funds channeled towards REITs.

“Access to new investors and capital makes financing developments easier,” he said.

He added that this increases liquidity in property holdings for pension funds and other institutions.

Bgoni indicated that REITs allow pension funds to dispose of part of their property portfolios in order to comply with IPEC regulations without having to sell the entire building.

“As the ZSE, our mandate is to ensure that we deepen the capital markets,” he said.

Datvest managing director Tendayi Muzadzi says the funds raised through the IPO are meant for the renovation and revitalization of portfolio properties in order to enhance their income-generating capacity.

Datvest Asset Management Company is the fund on behalf of the investors or unit holders, and the asset management company is 100 percent wholly owned by CBZ Holdings with an excess of $1 trillion in funds under management.

Muzadzi said globally, there has been securitization of real estate assets; however, in Africa, REIT is still a developing phenomenon, and Zimbabwe is the 7th country to introduce REIT.

“Pursuant to this, locally, it is an investment asset class that remains untapped, as we currently have one REIT in the country,” he said.

Patrick Gombe, an actuarial manager at Ipec, said the REIT will assist in regaining confidence in the pensions industry through widening investment options for pension funds and providing real returns.

“The Commission is impressed with this new innovation and development given the limited investment options that were available for different investors to find alternative assets for new and incoming contributions.

“The Commission is particularly impressed by the NRZCPF REIT, given the long journey that we walked with our capital markets stakeholders in lobbying for tax incentives on REIT,” he said.

He noted that the REIT was granted a prescribed asset status. “We hope this will improve general compliance with prescribed asset status by both the NRZCPF and other institutional investors, such as insurance companies and other pension funds.

Gombe said the REIT will be listed on the ZSE, hence increasing the liquidity and tradability of the investment.