(AFRICAN MARKETS) -- While the battle between the government and telecom companies continues, hails the news of another IPO. Arena Real Estate Plc. formerly known as Arena Real Estate Developers Company Limited is looking to revolutionize the real estate industry in Tanzania by floating 30% of their equity on the Dar-Es-Salaam Stock Exchange (DSE).
The company, a relatively new player in the highly lucrative real estate market, has wasted no time in broadening its portfolio. Despite only being incorporated in October 2014, the company has managed to optimize its revenue streams and has granted formidable glee to its shareholders.
Arena Real Estate Plc. is looking to be the first ever real estate company to be listed on the DSE and plans to submit its formal proposal in the coming weeks. The offer aims to auction 30% of its equity to the public with the issuance of 15,000,000 shares. As is the norm with most, the IPO will be priced at 500/- per share and will allow the company to raise Tanzanian Shillings 7.5 billion/-.
The enterprise began with a focus on buying and selling beach front surveyed plots and currently handles a portfolio of over 1,000,000 SQM of beachfront plots scattered across the country. In 2016, the company’s revenue stood at TZS 561 million/- with investment assets of TZS 2,280 million/- and inventory of TZS 1,950 million/-. The management is confident in its ability to provide growth and encourages everyone to participate in the IPO. To help diversify their revenue, the company has begun looking into investing in various large scale residential and commercial properties, and the IPO is going to help them do just that.
2017 is seeming to be a year of various firsts as we saw: our first investment company, TCCIA investments Plc. our first Telecom Company with Vodacom and, hopefully, our first real estate company with, Arena Real Estate Plc. With the guidance of a highly experienced board the company will submit its prospectus to the Capital Markets and Securities Authority (CMSA) in April 2017 and plans to launch its IPO in June/July 2017. The IPO will be open to all as the company looks to entice East African investors to participate in Tanzania real estate.
In an exclusive interview with African-Markets.com, to better grasp the vision of the company, we spoke with Dorice Emmanuel Malle, the Chief Operating Officer of Arena Real Estate Plc. Dorice is a Tanzanian national and is one of the newest members of the company. She has been working for the company since June 2016 and boasts years of experience under her belt working in Real Estate, Media and the Oil & Gas sector.
What is your current portfolio overview and how do you plan to diversify it with increased capital?
Currently the company has been selling beach plots and has been highly successful at that. With the increased capital we plan to develop modern serviced apartments in Dar-Es-Salaam and sell them on interest free mortgages for 5 -10 years. We also envisage increasing our investments into commercial plots such as malls, schools, hotels and petrol stations.
Who should be trading with Arena Real Estate PLC? And why?
We target partners and investors from all economic levels across all professions, our mission clearly says it all. No two people are the same, we are able to customize terms for each client individually. We pride the flexibility we have in our operations to cater for all our prospective clients. All our clients are individuals and not companies. We always receive positive feedback and have a large number of them as repeat clients.
What is the biggest challenge the real estate market faces currently and what do you think the outlook is for the next 5 years?
The only challenge is the public perception. The real estate market in the country is and will be a booming industry for a while. The majority of the public haven’t yet fully grasped the importance of living in well planned modern townships and buildings, but we see that changing as there is more youth coming up, who want quality accommodation. The modern youth value the ability to have “instant” customizable service and we pride ourselves to have immense flexibility. Mobile apps can be customized, why not a real estate product!
NHC is struggling to attain full capacity of its apartments, how are you convinced you will win the market?
We are very confident. We have been winning the market with our carefully designed, customizable projects and implementing strategies set by our Board of highly experienced Directors. The company has excellent leadership and guidance to ensure our shareholders receive what they deserve. Our Chairman is a retired Minister, an expert in urban housing and a published writer on the same topic (Dr. Makongoro Mahanga). Other board members include: Eng. Dr. Christina Kayoza an expert in civil engineering; Dr. Abdiel Abayo former Director at the Capital Markets and Securities Authority (CMSA) and an expert in corporate governance; brilliant and renowned bankers and public accountants (Mr. Harry Ndambala, Mr. Beatus Segeja Mr. George Mziray and Mr. Johanes Kerenge) just to name a few.
You are planning to launch your IPO at a time when many investors will be done with investing, while others will be waiting to invest in telecoms. Are you concerned about this?
This doesn’t worry us at all. We are the first real estate company to go public. We aim to capitalize on the first mover advantage. The IPO will be open to East African citizens and many foreigners want to take advantage of the margins in the real estate industry in Tanzania. Currently it is difficult to almost impossible for foreigners to own property without a Tanzanian partner. We believe the transparency a Plc. Company brings to the table, increases the credibility of our company for the masses to put their trust in us. Our entire portfolio is operated from property we own and the value of land is not looking to depreciate any time soon. Come rain come shine, a 1980 building is worth more now that it was in 1980 and the secret lies in owning the land. That’s a simple fact. We own over 1,000,000 Sqm of beach front properties across the country. Real estate will appreciate in value over time and in Tanzania we all know how high those rates are.
What is your growth plan once the company raises targeted amount? What growth rate do you envision to have? And how will you meet these goals?
In 2016, which was our second year of trading, the company’s revenue grew by 74% and gross profits by 52% from 2015, our first year of business. Once the company raises the IPO amount, we plan to keep the numbers above 50% for steady growth. We are currently in the preliminary process of undergoing the construction of our first commercial residential buildings in Tegeta; “Falcon Towers”. We are confident the numbers will rise after completion of the project. We handle a project at a time mitigating the risk of over trading.
Please share with us anything that you think has contributed to the success of your company.
Customer service has been at the center of our success. We follow the clients and deliver all paperwork to them. We save them the hustle and the bureaucracy. When you buy a property from us, we handle all paperwork and deeds on behalf of the client and see the task through to the deeds being handed over to the client by our staff.
What are some of the things that you have learned along the way?
There are hundreds of people who want to invest in real estate and do not know how. We want the people of Tanzania to know, that we are one of the easiest ways to fulfill their investment dreams in this sector.
Is there anything else you’d like to share with our readers?
This is an investment opportunity for everyone to own a small piece of real estate with very little investment and be at the center of innovation and revolution in the real estate industry in Tanzania. We hope the IPO will be a model for many in the future to follow suit and further develop the industry.