• Tue. Apr 23rd, 2024

ZHL shares fall amid growing anxiety over Eagle REIT’s listing

ByETimes

Jul 28, 2023

By ETimes

ZimRe Holdings on Friday said its Eagle Real Estate Investment Trust (REIT) will be launching two signature developments in Mazowe and Victoria Falls as it looks to unlock some value from its investment property portfolio.

The diversified group said the activities will be undertaken through its Eagle REIT to enable both local and international investor participation.

“I am happy to report that the Mazowe project has now received a development permit, so we should be on the ground in the coming few days. The location of the developments is not by chance as the group seeks to urbanise the communities,” Stanley Kudenga, ZHL group chief executive officer, told shareholders at today’s annual general meeting.

“All these were new acquisitions that created new value for shareholders; they are in excess of US$7-8 million that we had to take care of in the year. The priority for us is how we can enhance the balance sheet for the shareholders in the period under review.”

At the general meeting, the company’s shareholders were keen to understand how they were going to benefit from the Eagle REIT and whether it was going to be listed separately.

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The group delisted its property investment arm on the local bourse as it was not happy with the structure, saying “it wasn’t tax efficient”.

“It was our intention that if we wanted to make investments in the property sector, the best structure would be a REIT structure and we were currently lobbying the ministry of finance. We did quite intense lobbying at the ministry of finance to legislate the structure in terms of tax efficiency,” he said.

“So going forward, our intention is that the shareholders will directly invest in these projects to the extent of their capacity and these will then generate the revenue before taxation. So you get your rental income flowing directly by way of dividends to ZHL Group, which will be passed on to shareholders by way of dividends.”

Kudenga said shareholders are going to benefit on the basis that ZHL is going to be making investments in this project in tandem with other investors.

“It’s our intention to also then make significant participation on the construction so we end up with significant investment in these projects and the intention going towards is that also these lead structures will be eventually listed on the Victoria Falls Stock Exchange (VFEX) and as shareholders, we will have units that are listed on the stock exchange.

“Obviously we are going to list, but after we have created a bit of value for the shareholders; otherwise, you list and quickly earn value,” he said.

Analysts say it would be interesting to see how the funds raised from the listing could be utilised by the group.

Kudenga said: “So we are in the process of listing, but going into that listing we are saying there must be some serious value for shareholders, so in this instance all the investments that have been undertaken in terms of land acquisition and urban planning, designs and everything have all been funded by the shareholders, which is value going through shareholders, but the listing is work in progress.”

For the first five months of 2023, the group’s total income in historical terms increased by 555% to $22.36 billion from $3.42 billion in the comparative period.

“This growth was driven by an increase in US dollar revenue from the local entities from 35% in 2022 to 65% in the current year,” Kudenga said.

“Given the volatility of the Zimbabwean dollar, it is expected that the local business units core revenue, particularly general insurance and property, will continue to dominantly generate US dollars.”

ZHL’s regional operations remain a key strategic investment as a hedge against a volatile local business environment.

The regional reinsurance environment contributed 54% to the group’s gross premium written and 36% to total income.

Despite the challenging operating environment, the group posted an operating profit growth of 877% in historical terms, to $4 billion from $400 million in the comparative period.

The AGM approved $201.97 million paid as directors’ fees as well as the remuneration of $313.40 million paid to Grant Thornton Zimbabwe for the past year’s audit.

ZHL appeared on the Zimbabwe Stock Exchange fallers table today, with its share price losing 11.93% to close at $61.54 – Harare

By ETimes

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