NRZ new unit eyes US$8m through IPO
THE National Railways of Zimbabwe (NRZ) Pension Fund yesterday launched its real estate investment trust (REIT), Revitus, which is targeting to raise approximately US$8 million through an initial public offer (IPO) that opens today.
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.
The assets may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.
The promoter, NRZ Contributory Pension Fund (CPF), intends to sell a total of 121 378 791 units of the Revitus REIT at an offer price of $400 per unit by way of an offer for units to the investing public.
The IPO opens on November 16, 2024 and closes on December 7, 2024 and it is envisaged that the units will be listed on the Zimbabwe Stock Exchange (ZSE) on December 15, 2023.
“The funds are meant for the renovation and revitalization of portfolio properties in order to enhance their income-generating capacity, thus enhancing the pension benefits for NRZCPF members through uplifting the values of the underlying property portfolio,” said Datvest managing director Tendayi Muzadzi at the launch.
Datvest Asset Management Company will manage the fund on behalf of the investors or unit holders, and the asset management company is 100 percent wholly owned by CBZ Holdings and has over $1 trillion in funds under management.
ZSE chief executive officer (CEO), Justine Bgoni, said the development and growth of the ZSE would come from new products and services, such as REITS.
He said the Zimbabwean capital markets have seen a growth of interest in the investment instrument, and the listing of the Revitus REIT is indeed a welcome development to 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 increased liquidity in property holdings for pension funds and other institutions.
Mr 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.
NRZ CPF chairman Takunda Madanha said that over time, the REIT will acquire more buildings not only from the fund but from other investors who meet the criteria for inclusion in the fund.
As regulated investment vehicles, REITs enable the issuer to pool investors’ funds for the purpose of investing in real estate. “Listing the Revitus REIT on the bourse will make the fund’s property assets more liquid while also allowing smaller pension funds the opportunity to own real estate as an investment asset class.
“REITs also provide guaranteed dividends that are distributed from the net rental income,” he said.
He said NRZCPF had traditionally contributed to the growth and outlook of the country as the largest owner of major office buildings in the Central Business Districts (CBDs) of the major cities in Zimbabwe.
He added that over time, changes in economic dynamics and social patterns have resulted in most CBDs losing their luster and a number of buildings starting to experience low occupancy as most companies start moving out of the CBD.
“At the same time, new opportunities are emerging for urban re-generation to take advantage of new economic and social patterns which have created new pockets of demand for CBD properties.
“The launch of our REIT’s IPO is an exciting opportunity for large pension funds, smaller pension funds, other institutional investors, and retail investors to gain exposure to a robust portfolio of real estate assets overseen by an experienced management team,” he said.
However, Mr 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.
He said, pursuant to this, that locally, it is an investment asset class that remains untapped, as we currently have one REIT in the country.
Under the Revitus REIT, there are five buildings that will undergo different types of development.
Three are in Harare and two in Bulawayo. Mr 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.