The Revitus Property Opportunities Real Investments Trust (Revitus REIT) has become the second REIT to be listed on the Zimbabwe Stock Exchange (ZSE) following its official listing yesterday.
Tigere was the first REIT to be listed on the ZSE last year
The REIT is a product of the NRZ Contributory Pension Fund (NRZCPF), managed and administered by CBZ Asset Management unit Datvest, while Stanbic Bank comes in as a trustee to oversee the interests of investors.
Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube said at the REIT’s listing ceremony that the Government would continue to support such investment product innovations that help grow the country’s capital markets and mobilisation of savings.
“The Government allowed for the setting up of REITs in the country with the primary motivation to allow pension funds that were overexposed to the real estate asset class to use those properties to access liquidity from the capital markets and be in a position to pay member benefits timeously.
“That explains why, in my 2020 budget statement, I specifically excluded pension funds from the requirement that buildings that have to be part of a REIT should only be new, taking cognisance that most pension funds were already sitting on vast buildings in need of a revamp.
“For similar reasons, I also exempted pension funds from other restrictions, such as shareholder spread limits, in my 2022 budget,” he said.
Minister Ncube said real estate was generally considered a key part of any diversified portfolio because of its inflation-hedging characteristics, but the limitation for most pension funds investing in this asset class has always been a lack of divisibility when one wants to invest and a lack of liquidity if one wishes to exit.
“REITs solve both problems and, in the process, allow the wider investing public to acquire a portion of the real estate and enjoy the benefits accruing from them,” he noted.
The Minister noted that the Revitus REIT was the first REIT to be licensed by the Securities and Exchange Commission of Zimbabwe and also the first to be promoted by a pension fund to list, and this followed the introduction of legislative changes and tax incentives allowing for the establishment of REITs in the country.
“Let me congratulate the NRZ Contributory Pension Fund for taking the bold move and embracing such initiatives from the Government for the ultimate benefit of its members.
“It is worth noting that the NRZ Contributory Pension Fund is one of the largest pension funds in the country and also one of the largest owners of office blocks within our cities. By setting up this REIT, they are indeed leading by example,” Minister Ncube said.
He noted that the REIT will be a major player in the development of infrastructure in the country, with the specific objective of revitalising some of the buildings and contributing to urban renewal.
Minister Ncube said the Government fully supports such initiatives as they are part of urban regeneration and modernisation of the economy.
“To demonstrate our support, my ministry granted prescribed asset status to the Revitus REIT, and this should enhance its attractiveness not only to institutional investors who wish to comply with regulatory requirements but also to any investor looking for a safe, stable investment avenue.
“We have seen similar urban re-generation initiatives across the world where cities t hat were on the verge of urban decay were revived and renewed through creative thinking and re-designs, including changes of use.
“While some companies may be leaving the central business districts (CBD) to move their head offices to suburban areas, this presents an opportunity to reconfigure the buildings to suit current consumer patterns and requirements, including the needs of small and medium-scale enterprises that still find the CBD very convenient,” he said.
Minister Ncube said pension funds primarily allocate their members’ contributions into securities, real estate, hedge funds, bonds, stocks, equities, and other alternative investments, thus vicariously making these pension funds the cornerstone of any modern economy.
He said these financial assets and investments then translate into post-retirement income and a social safety net for the citizenry.
“It is also imperative for all players in the capital markets to market such safer, regulated products as REITs to the wider public to forestall them from losing their valuable savings through Ponzi schemes.”
Minister Ncube said as the economy continues to stabilise with the declining inflation levels witnessed in the past six months, it is imperative to revive a savings culture among the people.
He said experiences from elsewhere, especially East Asian countries such as China and Singapore, have shown that there is a strong positive correlation between high levels of savings, capital formation, and economic growth, and this has been the missing link in our economy.
NRZ Contributory Pension Fund board chairperson, Mr Takunda Madanha, said the REIT will revive construction activity in city centres as part of the urban renewal concept.
“This will boost confidence in the economy, and the REITs are a secure way for diasporas to invest in property,” he said.
Market watchers say REITs remain a fair investment option, especially for pension funds, providing an opportunity to raise funds for the rejuvenation of buildings, especially in CBDs, which are dilapidated and have become an eyesore.
However, the Revitus REIT raised $48,551 billion through an initial public offering (IPO), which opened on November 15, 2023, and closed on December 14, 2023. The REIT will start trading on the ZSE on Wednesday, December 20, 2023.