The Tigere Property Fund will increase net asset value by over 50% and give investors a 25% bump in earnings if unitholders agree to add Highland Park Phase 2 to its portfolio.
Tigere was the first to launch a real estate investment trust (REIT) on the Zimbabwe Stock Exchange, allowing investors a share of profits from the first phase of Highland Park and Chinamano Corner. Highland Park Phase 2, which opened in December last year, will boost Tigere’s net asset value from US$22.5 million to US$33.8 million, the fund says in a circular to unitholders proposing a transaction to buy Highland Park 2.
“The Tigere REIT has an ambitious yet achievable target to reach a net asset value of US$100m within the next five years (by 2028) as part of its accretive yield growth strategy,” Tigere says. “Hence, this represents a major step towards achieving the aforesaid objective.”
Under the transaction, Tigere proposes to pay US$11,294,810 for Highland Park Phase 2. The payment will be done by issuing 351,282,000 units to Modern Touch Investments, which holds the property. Modern Touch is an associate of Frontier Real Estate, which has 39.2% of the voting rights in the Tigere REIT. An EGM has been set for August 29.
The fund’s push to reach US$100 million will see more properties being added, pointing to further calls to unitholders ahead. Frontier is currently developing the Highland Precinct, a mixed-use office and residential project, and will soon complete Greenfields at Showgrounds. These may be added to Tigere in future.
___
Says Tigere: “The REIT has consistently communicated its intent to fund growth through the issuance of new units.”
Issuing out new units will dilute existing unitholders. But the upside is that Tigere estimates that this will be offset by a 25% increase in earnings as Highland Phase 2 brings in more income. The Tigere REIT investment property yield and yield on NAV will increase to 6.2% and 6.07%, respectively.
Highland Park Phase 2 has a lettable area of 2,930 square metres and earns US$949,668 per year. Food and beverage businesses account for 59% of the lettable area of the complex. Some 37% of Highland Park 2’s income comes from Simbisa Brands outlets, among them Rocomamas and Spur.
“Exposure to large listed multinational tenants (FCB, CBZ and Simbisa) provides diversification of risk and stability in rental income for the asset.” Says Tigere.
ALSO READ | The Game Plan – Location, Location: Tigere’s plan to build property portfolio to US$100m
