ZSE to list first REIT
TIGERE Property Fund is on the cusp of listing on the Zimbabwe Stock Exchange (ZSE), becoming the country’s first listed real estate investment trust (REIT) as the fund seeks to grow a US$50 million property portfolio and deepen the capital markets.
Zimbabwe’s property market has largely mirrored the performance of the overall economy over the last half a decade which was characterised by low economic activity, inflationary pressures, power challenges and foreign currency constraints. All these have had an adverse impact on businesses. The property market has generally remained subdued, characterised by significant vacancy levels in various sectors of the market.
The promoter, Frontier Real Estate, intends to sell a total of 255 323 000 REIT units by way of an offer for sale at an offer price of ZW$28 per unit. At conclusion of the IPO, it is envisaged that the entire issued REIT Units of 719 323 000 will be listed on the ZSE.
According to the company’s prospectus, Tigere REIT will have an initial market capitalisation of ZW$20 141 044 000 comprising of 719 323 000 REIT units of ZW$28 each held by the Promoters and Anchor Investors. The Promoter seeks to raise at least ZW$7 149 044 000 through the sale of 255 323 000 REIT units at a unit price of ZW$28 per unit.
A minimum of 10% of the REIT IPO units (25 532 300) REIT units shall be made exclusively available to retail investors participating on the C-Trade and ZSE-Direct platforms. Should these not be fully subscribed by retail investors, they will be made available for allocation to other investors.
A REIT is a collective investment vehicle that allows investors to pool capital, which is then invested in a portfolio of selected properties for a return. Investors are certain of dividend yield and payments as REITs are mandated to distribute a minimum of 80% of Nett Income. The REIT structure is not subject to income tax and investors receive a flow-through of income.
Brett Abrahamse of Terrace Africa Asset Management told journalists this week that the listing which is slated for 23 November would deepen the country’s capital markets.
“We are delighted to announce the listing of the Tigere REIT, which is an important step in developing and strengthening the capital markets, as well as building a strong real estate sector within Zimbabwe. Our seed assets are already performing exceptionally well, with income and occupancy levels trading ahead of initial expectations,” said Abrahamse.
“The Tigere REIT will provide an opportunity for both public and institutional investors to participate in well managed newly-developed, commercial properties through the purchase of REIT units on the ZSE. Unit holders will also have access to our extensive and innovative US$50m property development pipeline, which comprises of exciting commercial projects that are currently in planning or development stage.”
The Tigere REIT according to the company will be listed on the Zimbabwe Stock Exchange under the symbol TIGZ and will provide an opportunity for investors to own a stake in high quality commercial property through a highly regulated financial structure. The Tigere REIT, which was approved by the Securities and Exchange Commission in July 2022 is set to enhance the current property investment market through improved transparency, liquidity and compulsory dividend pay-outs.
According to Abrahamse, the Tigere REIT has been seeded with two new commercial retail assets, namely Highland Park and Chinamano Corner, which together have a combined total of 41 retail tenants. Over 75% of income earned from tenants by the Tigere REIT is USD linked and occupancies are currently reported at 95%.
Justin Bgoni (pictured), Zimbabwe Stock Exchange (ZSE) CEO said he was excited with the new listing.
“The listing of the Tigere Property Fund is an exciting moment in the history of Zimbabwe’s property sector and the broader economy. It is a culmination of years of work and policy driven by the Minister of Finance and Economic Development, Hon. Mthuli Ncube to grow and deepen capital markets that has led to the formation of REITs in Zimbabwe. As the
ZSE, we are indebted to the ministry’s support and believe this listing is a symbol of progress and that Zimbabwe is open for business. We look forward to seeing more REITs list in the near future and congratulate the Tigere team on their achievement and unlocking more value for investors and facilitating economic growth in the country,” he said.
Michael Craft, Frontier Real Estate, Tigere Property Fund Promoter said the listing would broaden investment in the property sector.
“We are very excited to be the first to list a REIT in Zimbabwe. We strongly believe this important development will boost the local property market, improve governance and give investors an opportunity to invest transparently in the commercial property sector,” Craft said.