ZHL Group has announced that its soon-to-be-listed Real Estate Investment Trust (REIT) is expected to bring much-needed cash injections into the local real estate market, with a focus on attracting pension funds.
By Ryan Chigoche
The REIT has been granted prescribed asset status, allowing pension funds to invest their pool of funds into the REIT.
In 2023, Zimre Group took strategic steps to transform its property portfolio and make its mark across the country in terms of infrastructure development. These moves will be implemented through the Eagle REIT, which houses two major projects in Mazowe and Victoria Falls.
In the company’s annual report, Group Chairman Desmond Matete stated that the Eagle REIT’s prescribed asset status will inject fresh liquidity into the sector by providing pensioners with an investment option.
“The ZHL Group is optimistic that, like the Eagle, it shall soar in 2024. The Group’s strategy remains anchored on delivering a strong cash wallet. The Group’s Eagle Real Estate Investment Trust (REIT) attained Prescribed Asset Status from the Insurance and Pensions Commission of Zimbabwe (IPEC) after the reporting period. It is anticipated that the Eagle REIT will bring much-needed liquidity to the real estate market, especially for Zimbabwe’s pension community.
“As a responsible member of society, ZHL is determined to bring high-impact sustainable investment opportunities to the public.”
The Eagle REIT, promoted by Fidelity Life Asset Management (FLAM), aims to raise US$60 million for its flagship projects in Mazowe and Victoria Falls, targeting entry yields of 8%.
So far, US$9.7 million has been raised, US$8.6 million is committed and awaiting drawdown, and significant progress has been made in securing US$15.5 million, which is currently at the approval stage.
The REIT is expected to be listed on the VFEX in the fourth quarter, becoming the first REIT on the foreign currency stock exchange. Currently, only the ZSE has two REITs, REVITUS and Tigere.
Matete added that the Group will continue to leverage its experience and dynamism to enhance market share acquisition through innovations and new tools that embrace customer-centric ecosystems, creating new value and change for its stakeholders.
Last year, the Group’s property portfolio recorded a 137% growth in rental revenue to ZWL13 billion in 2023 (inflation-adjusted terms), contributing 96% to the cluster’s total revenue.
The Group’s Investment and Wealth Management cluster, which includes ZAC Global, Fidelity Life Financial Services, Fidelity Life Asset Management, and Zimre Capital, recorded a 119% growth compared to the prior year, with ZAC Global contributing 50%. Fidelity Life Asset Management achieved a turnaround performance, with management fee income growing by 652% as the unit added new business lines to its traditional portfolio.
Meanwhile, Zimre Group’s profit in the 2023 financial year rose 321%, from ZWL72.4 billion to ZWL304.9 billion in inflation-adjusted terms, as the Group realized profits across all its key lines of business, including reinsurance and reassurance, short-term insurance, life and pensions, real estate, and wealth management.
As a result, the Group closed the year in a strong financial position, with real growth in total assets and excellent cash generation. The Group’s total assets rose by 81%, from ZWL650.5 billion to ZWL1,180.2 billion in inflation-adjusted terms.
During the reported period, Zimbabwean reinsurance operations saw a marked improvement in claims experience and increased business support from both local and external markets. Consequently, Zimre’s insurance revenue grew from ZWL31.25 billion to ZWL74.5 billion in 2023 (inflation-adjusted terms).
Local reassurance operations also grew during the reported period, surging 113% in insurance revenue to ZWL17 billion in 2023, compared to ZWL8 billion in 2022. The life and health business saw a significant shift towards business written in USD, bringing the overall USD revenue mix to 85%, compared to 70% in the prior year.
The short-term insurance broking unit initiated a restructuring process to build capacity for organic growth. The unit introduced new business lines such as employee benefits and healthcare, while also expanding the agriculture portfolio. As a result, the unit saw a 262% improvement in total revenue compared to the prior year (inflation-adjusted terms).
The Life and Pensions unit recorded ZWL117 billion in revenue, reflecting a 242% growth compared to the prior year. This was driven by the success of the Life and Pensions’ flagship savings product, Vaka Yako, which continues to drive USD revenue inflows for the business.
Looking ahead, Zimre Group has set various initiatives in place to deliver a strong cash wallet, with key efforts focusing on balance sheet enhancement and the optimization of strategic business units within the insurance value chain.