Property investment fund, Pfuma, is seeking to list its Real Estate Investment Trust (REIT) on the Victoria Falls Stock Exchange (VFEX) during this quarter to secure funding for its two upcoming projects.
The US$15 million raised from the subscription of Pfuma REIT units will be allocated to expand the REIT's property portfolio through the development and construction of Project Enterprise and Project Ruwa.
The estimated build cost for these projects is US$13,6 million, with US$1,4 million reserved for contingencies, Pfuma Fund, whose main sponsors are Simbisa Brands and Big Poppa's Private Limited, said in a road show presentation summary.
Situated on a prime six-hectare commercial site along the Harare-Mutare Road, the Ruwa Project is a mixed-use retail centre.
With a projected build cost of US$12,6 million, the centre will be a bustling hub of commercial activity.
Anchored by a major hardware retailer and a supermarket, it will also feature several popular fast-food brands, including a convenient drive-through, a fuel station, and a variety of other retail outlets.
Construction will proceed in phases, with the initial focusing on delivering the fast-food outlets, fuel station and hardware retailer.
Project Enterprise, located in Eastlea, just off ED Mnangagwa Road, offers both walk-in and drive-through options for the largest quick service and fast-food operator in the country and is expected to cost US$1 million
Pfuma REIT has a diversified property portfolio, including Hogerty Hill Centre, a mixed-use development with a service station, food outlets, retail outlets and a supermarket; and Cork Corner, a commercial complex comprising a restaurant hub, a wholesale market and a service station in Chegutu.
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The REIT's properties are strategically located in various areas to capitalise on economic activity in different high-traffic nodes, ranging from low-density to medium or high-density areas.
The listing of Pfuma REIT on the VFEX will enable the trading of units in US dollars and provide the ability to raise additional US$ capital for future expansion of the property portfolio.
The REIT's five-year plan is to increase its portfolio through acquisitions in specific areas like Ruwa, Eastlea, Kuwadzana, Marondera and Mbudzi.
The goal is to reach a portfolio value of US$50 million.
REITs are gaining traction in Zimbabwe. Just three years ago, Zimbabwe had not REIT listings, but now there are two.
A REIT is a property investment vehicle that sells units to investors and distributes rental income periodically.
In Zimbabwe, REITs are distributing at least 80 percent of their net income to unit holders, making them a hybrid of debt and equity instruments.
One of the key advantages of REITs in Zimbabwe is that they are exempt from corporate tax at the company level.
This means that the only tax is paid by the unit holders.
To ensure this tax benefit is not abused, authorities have stipulated that REITs can only include properties built after 2020 or owned by tax-exempt entities like pension funds.
