The journey of real estate investment trusts in Zimbabwe

In the dynamic and ever-evolving landscape of Zimbabwe's financial markets, real estate investment trusts (REITs) stand as formidable instruments for both capital growth and market participation.

The process of establishing and listing a REIT on the Zimbabwe Stock Exchange (ZSE) is a journey marked by intricate regulatory frameworks, strategic engagement with expert advisors, and a keen eye for unlocking growth potential within Zimbabwe's burgeoning real estate sector.

Real estate investment trusts (REITs) have emerged as transformative vehicles globally, offering investors unparalleled access to real estate assets while fostering liquidity and diversification.

In Zimbabwe, REITs play a crucial role in democratizing real estate investment, providing individuals and institutions with the opportunity to partake in diversified property portfolios without the complexities of direct ownership.

With Zimbabwe's real estate sector poised for growth, REITs present compelling avenues for investors to capitalize on this potential while enjoying attractive returns and income streams.

The allure of REITs lies not only in their ability to generate steady income through rental yields but also in their potential for capital appreciation as property values appreciate over time.

Listing a REIT on the Zimbabwe Stock Exchange offers a myriad of benefits for both issuers and investors.

Firstly, it provides a structured platform for capital formation, enabling REITs to raise funds for property acquisition and development initiatives, thereby fuelling growth and expansion.

Moreover, a ZSE listing enhances transparency and credibility, as REITs are subject to regulatory oversight and stringent disclosure requirements.

This instils investor confidence and fosters trust, ultimately attracting a broader investor base and enhancing market liquidity.

By listing on the ZSE, REITs gain access to a pool of potential investors, including institutional investors, retail investors, and foreign investors, thereby broadening their investor base and increasing liquidity in the market.

Additionally, a ZSE listing provides REITs with visibility and exposure, enhancing their profile within the investment community and facilitating future fundraising efforts.

Embarking on the journey to list a REIT on the ZSE demands meticulous planning, strategic execution, and collaborative engagement.

The process begins with preliminary discussions with the ZSE to assess the feasibility of listing and understand the regulatory requirements specific to REITs.

Subsequently, internal approvals must be obtained, including board resolutions and, potentially, shareholder approval, depending on the REIT's corporate structure.

With internal approvals secured, REITs must assemble a proficient team of expert advisors, including sponsors, financial advisors, legal advisors, accountants, and transfer secretaries, to guide them through the listing process.

These advisors play pivotal roles in preparing listing documentation, coordinating with regulatory authorities, and ensuring compliance with ZSE rules and regulations.

Finally, REITs must prepare and submit listing documents to the ZSE, adhering to prescribed formats and requirements, to initiate the listing process.

The ZSE imposes specific requirements on REITs seeking listing, aimed at safeguarding investor interests and maintaining market integrity.

These requirements include evidence of registration as a REIT with the Registrar of Collective Investment Schemes, minimum subscribed capital, satisfactory profit history, and minimum shareholder spread.

Additionally, REITs must fulfil ongoing reporting and disclosure obligations post-listing to ensure transparency and accountability to investors.

By meeting these requirements, REITs demonstrate their commitment to upholding the highest standards of corporate governance and transparency, thereby enhancing investor confidence and trust.

Listing a REIT on the ZSE incurs various fees, including document review fees, initial listing fees, and annual listing fees.

These fees are determined based on the value of REIT units being listed and are subject to periodic review by the ZSE. In addition to listing fees, REITs must also budget for professional advisor fees, including those for sponsors, financial advisors, legal advisors, accountants, and transfer secretaries, which contribute to the overall cost of the listing process.

While the cost of listing a REIT on the ZSE may vary depending on various factors such as the size and complexity of the REIT, it is essential for issuers to budget accordingly and carefully consider the potential return on investment.

By adhering to the outlined process and engaging proficient advisors, REITs can successfully navigate the ZSE listing process, accessing capital markets and unlocking opportunities for growth and investment in Zimbabwe's real estate sector.

With the potential to democratize real estate investment, enhance market liquidity, and foster economic development, REITs hold immense promise for issuers, investors, and the Zimbabwean economy at large.

As the real estate sector continues to evolve, listing REITs on the ZSE emerges as a compelling strategy for entities seeking to capitalize on this dynamic market and drive sustainable growth in Zimbabwe.

With careful planning, strategic engagement, and a commitment to transparency and accountability, REITs can leverage their listing on the ZSE to attract capital, expand their asset base, and create value for investors and stakeholders alike.

In conclusion, navigating the realm of real estate investment trusts (REITs) in Zimbabwe demands meticulous attention to regulatory compliance, strategic engagement with expert advisors, and a steadfast commitment to unlocking growth potential.

As Zimbabwe's financial markets continue to evolve, REITs stand as pillars of opportunity, bridging investors to the dynamic landscape of the real estate sector while bolstering economic prosperity.

By understanding the potential of REITs, embracing the benefits of listing on the ZSE, and fulfilling the necessary requirements, issuers can seize the opportunity to unlock growth and investment in Zimbabwe's real estate sector, thereby contributing to the country's economic development and prosperity.

*Dr Bekithemba Mpofu  is the chief real estate officer at Integrated Properties