Facelifts for Pioneer, Africa House

THE National Railways of Zimbabwe Contributory Pension Fund (NRZCPF) is poised to radically transform Bulawayo’s city centre landscape as plans are afoot to remodel Pioneer House and Africa House into mixed property use to include apartments, lodges and hotels.

By 2026, Pioneer House will be repurposed from office use to licensed residential which can include long-stay apartments, lodges, and hotels.

Added to that, the proposed facility will have apartments and other supporting facilities such as a restaurant, shared workspace, and an entertainment lounge.

 The accommodation list comprises 75 apartments, janitor and caretaker rooms, reception, shops, circulation space, laundry, shared workspaces, a bar, a gym, and a games room.

Last week, the pension fund launched its real estate investment trust (REIT), Revitus, which is targeting to raise $48 billion through an ongoing initial public offer (IPO).

A REIT is a company that owns and typically operates income-producing real estate or related assets, for which units of an investment pool are created and sold to investors in the same way as company stock.

The assets may include office buildings, shopping malls, apartments, hotels, resorts, self-storage  facilities, warehouses, and mortgages or loans.

The NRZCPF intends to sell a total of 121 378 791 units of the Revitus REIT at an offer price of $400 per unit by way of an offer for units to the investing public.

The IPO opened on November 16, 2023, and closes on December 7, 2023, and it is envisaged that the units will be listed on the Zimbabwe Stock Exchange (ZSE) on December 15, 2023.

Under the Revitus REIT, there are five buildings that will undergo different types of development — two in Bulawayo and three in Harare. 

The funds to be raised in the IPO (Phase 1) will be targeted at refurbishing Chester House in Harare while the remaining properties — Electra House, Atlas House (all in Harare) Pioneer House, and Africa House in Bulawayo will be done in two phases. Based on the prospectus — the current market value for Pioneer House is pegged at US$$2,2 million and the gross replacement value by 2026 would be US$13 million.  

On the other hand, Africa House market value is envisaged to surge from the current US$$2,4 million to Gross Replacement Value US$11 million.

According to the detailed prospectus, over two decades of economic challenges saw Zimbabwe’s commercial property market experienced a decline in demand for space particularly in the office sector as businesses downsized or closed down.

The retail sub-sector has been relatively resilient largely due to the limited availability of quality space.

It said the industrial property sub-sector has persistently underperformed due to subdued manufacturing activity, a fluid operating environment, and rising volumes of imports.

The lethargic growth in commercial property development coupled with a lack of routine renovations and maintenance has resulted in a rapid deterioration of some of the major buildings that used to define the streetscape of the cities and towns in the country.

“Most high-rise buildings are now in a rundown state characterised by, among other things, low occupancy, non-functioning elevators, worn out furnishings and exteriors, poor parking facilities, dirty and congested alleys,” reads the document.

Money – Image taken from Pixabay

It added that the state of the central business district (CBD) has resulted in businesses relocating to surrounding office parks and suburban residential areas to escape the congestion, lack of parking space, and dilapidated amenities that have become synonymous with the city centre. The migration has left city centre buildings with high vacancy rates despite the centrality to economic activity that the CBD brings to most businesses. 

“Furthermore, the CBD has a more robust infrastructure which contributes to the convenience of residing and doing business in it. This presents an opportunity to salvage some distressed properties at considerable discounts, reconfiguring them to improve rental income and capital values with a long-term view,” read the document.

The economic stability that the country has started to witness is poised to bring about a sustained rebound in economic activity and growth.

The document noted that the commercial property sub-sector will be one of the key beneficiaries of economic recovery.

“Similarly, investments in currently distressed properties will allow capital appreciation and growth in earning capacity as the economy recovers. Most investors in the commercial property sector are institutions, dominated by pension funds who, alongside listed property companies, directly own the majority of the CBDs’ high-rise buildings.”

The fund will acquire a diversified portfolio of commercial properties particularly office and retail properties.

Chronicle

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