Tigere Property Fund Delivers Strong Results: Setting the Stage for REIT Success in Zimbabwe.
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Tigere Property Fund Delivers Strong Results: Setting the Stage for REIT Success in Zimbabwe.

Zimbabwe's first listed Real Estate Investment Trust (REIT), the Tigere Property Fund, has announced impressive results for its maiden full financial year ended 31 December 2023. The REIT demonstrated resilience amidst economic challenges, delivered on dividend expectations, and strategically positioned itself for sustainable growth going forward. Real estate investors and stakeholders have plenty to be excited about with this pioneering listed property vehicle.

Financial Highlights

  • Net Property Income of US$1,491,279 generated
  • Property valuation increase of 1.18% due to higher underlying property valuations
  • Full-year dividends totalling US$1.056 million declared, reflecting over 90% payout ratio

The healthy net property income underscores the REIT's ability to generate hard currency cash flows from its portfolio of premium properties. The marginal uplift in property valuations is a positive signal, reflecting the REIT's judicious property selection and value preservation amid economic turbulence.  

Importantly, Tigere REIT lived up to its commitment of delivering attractive income distributions to unitholders. The cumulative US$1.056 million dividend for the year, paid quarterly, translates to an annualized yield of around 7% based on the REIT's current market capitalization. This robust payout ratio of over 90% of net income demonstrates the REIT's dedication to passing through rental profits to investors.

Portfolio Performance

  • Highland Park Phase 1 and Chinamano Corner assets maintained 100% occupancy in H2 2023
  • Highland Park Phase 2 opened in December 2023 to strong demand
  • Tigere REIT has pre-emptive rights to acquire accretive Phase 2 asset

The REIT's flagship Highland Park Phase 1 and Chinamano Corner properties were fully occupied in the latter half of 2023, underpinning the stability of rental income streams. The successful launch of Highland Park Phase 2 in December was a key milestone, with the asset being well-received by retailers and consumers alike as evidenced by robust foot traffic and tenant turnover.

Notably, Tigere REIT holds pre-emptive rights to acquire the Phase 2 property at an accretive yield. A pre-emptive right allows the REIT to purchase newly issued units before external parties, preventing potential dilution of unitholders' interests. This strategic position paves the way for an earnings-accretive acquisition that can boost distributable income and dividends further.

Growth Strategy

  • Pipeline of "exciting" new retail and commercial property acquisitions  
  • Target to grow assets under management beyond US$100 million within 3 years
  • Focused on enhancing income, diversifying across tenants, sectors and geography

While consolidating its existing portfolio, management has its sights firmly set on an ambitious growth plan. The REIT has secured a promising pipeline of potential acquisition targets across the retail and commercial property sectors. These "exciting" opportunities will facilitate sectoral diversification and sustained income growth for unitholders.

Tigere REIT is targeting to rapidly scale up, with bold aspirations to grow its asset base beyond US$100 million within the next three years. This will be achieved through a pragmatic acquisition strategy focused on securing quality income-generating properties. Simultaneously, the REIT aims to enhance revenue diversification by broadening its tenant base, property sectors, and geographic footprint – important risk mitigators.

Positioned for the Future

Terrace Africa Asset Management's Managing Director, Brett Abrahamse, expressed his delight with the first full year's performance, noting, "We anticipate continued stability in hard currency revenue and dividend payouts. The REIT has benefitted from strong and growing retail and food tenant turnovers."

He emphasized the REIT's commitment to creating long-term value, stating, "New acquisition opportunities will provide the REIT with future geographic, sectorial and counterparty diversification. We remain committed to delivering sustainable growth and creating long-term value for our unitholders."

With a solid financial foundation, a clearly defined growth strategy, and an innovative vehicle structure ideal for Zimbabwe's challenging economic landscape, the Tigere REIT appears well-positioned to capitalize on opportunities in the country's real estate market. The REIT's ability to generate hard currency returns, rapidly grow its asset base, and maintain robust dividend payouts should continue attracting investors seeking consistent income streams and a hedge against inflation.

As Zimbabwe's first REIT proves the merits of this investment model, the listing potentially paves the way for more real estate companies to follow suit and tap into investor appetite. The successful establishment of a REIT market can catalyse capital formation, bring global best practices, drive portfolio diversification and enhance the overall maturity of the real estate sector. Exciting times lie ahead for property stakeholders in Zimbabwe.