daniel chigunwe
Business Writer
Seef Developments is seeking to raise capital for a Real Estate Investment Trust focused on the hospitality and tourism sector.
The Seef Developments Hospitality and Tourism Property Fund (SDHT Property Fund) or Real Estate Investment Trust (REIT) plans to raise US$3 million through a private placement, but will eventually be listed on one of the local stock exchanges, sources familiar with developments say.
A real estate investment trust (REIT, pronounced “reet”) is a company that owns, and in most cases operates, income-producing real estate. The Seef REIT will own properties in the hospitality and tourism sector including movable property such as vehicles that can be used by tourists.
In Zimbabwe a REIT is a regulated investment vehicle that enable collective investment in real estate. To participate in a REIT, investors pool their funds and invest in the trust that is divided into units, with the intention of earning profits or income from real estate, as beneficiaries of the trust.
The legislation in Zimbabwe stipulates that at least 80 percent of gross taxable income must be distributed to unit holders.
The US$3 million will be raised through issuance of 300 000 units worth US$10 each or approved movable and immovable assets.
The funds will be used for the acquisition, refurbishment and development of assets in the tourism and hospitality sector.
According to the investment teaser seen by this publication, the objective of the scheme is to offer members of the public and institutional investors opportunities where they can acquire a participatory interest in the ownership of “quality hospitality and tourism assets, as proposed by the Promoter, Manager and Trustee and Key Participants.
“Furthermore, the option of a growing income, security and preservation of the purchasing power of precious capital. In addition, sharing in long term capital growth resulting from the increase in the value of such attractive assets provides a great motivational case to various investors.”
The REIT which will open for private placement on July 26, 2023 will hold foreign currency generating hospitality and tourism assets which include hotels, holiday homes, lodges, functions’ venues, harbours, marinas and land suitable for development into hospitality and tourism properties and any other hospitality and tourism assets.
Tourism receipts in Zimbabwe for the years 2018; 2019; 2020 and 2021 were US$1,386 billion, US$1,247 billion, US$360 million and US$397million respectively.
With that context, the Property Fund endeavours to get a foothold in a multi-million dollar industry, according to the Investment Teaser. Malvin Chidzonga, representing Nivteil Capital, who are the Resource Mobilisation and Investor Relations’ Consultants for the REIT, highlighted that, “This REIT will simultaneously prop up service capacity and aggregate consumer demand for the tourism sector through a seamless vortex transmission mechanism”.
Bongani Ndlovu