May 28, 2024

Revitus anchors REIT business on CBD properties

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REVITUS Property Fund is anchoring its real investment trust (REIT) business on the revitalisation of the central business district (CBD) properties to improve occupancy levels and rental yields.
The property fund said the CBD area was suffering from voids owing to poor maintenance, but believes the area still wields significant potential to drive returns.
Revitas contends that the dilapidated state of the CBD properties presents a strong case for urban regeneration. The neglect is however, coming at a cost to the capital city’s appeal, as the quality of the properties continues to deteriorate in terms of standards.
This has led to a massive exodus by corporates from the CBD, preferring to set their office spaces and head offices in suburbs proximate to the CBD.
Revitus has since embarked on a pilot refurbishment project, which includes the refurbishment of Chester House in Harare and the introductory scoping of Pioneer House renovations in Bulawayo.
The facelift at Chester House is now at an advanced stage with the conversion from office use to residential accommodation scheduled to commence in the third quarter of this year.
“The CBD offices sector continues to struggle with high voids as occupants exit the CBD preferring suburban office locations to escape from increased traffic congestion, high parking fees, street vendors, and soaring rentals.
“Revitus Property Fund remains focused on the vision to revitalise CBD properties and improve the occupancy ratios, rental yields, and market values,” said Revitus in its first quarter to March 2024 trading update.
Revitus said the market has been characterised by a surge in commercial and residential real estate developments with a noticeable number of cluster apartments, shopping malls and service stations being constructed within and on the outskirts of major urban centres.
The REIT experienced average occupancy and weak yield ratios removing tenants in preparation for renovations and termination of non-performing leases.
A dip in performance was exacerbated by economic challenges experienced in the economy, amid inflationary pressures and exchange rate volatility, which added pressures on tenants’ ability to meet their obligations, a development that overall led to low collection rates in the first quarter of 2024.
The entity is optimistic about prospects for improved performance buoyed by the anticipated strong occupancy emanating from revitalised buildings, expected to attract quality tenants in the short to medium term.
Revitus said it was optimistic that the general economy would be resilient buoyed by diaspora remittances which were likely to remain strong, supporting liquidity requirements in the highly dollarised economy and sustaining domestic trade, services and construction activities.
“Anticipated economic stability driven by a more stable structured currency is expected to enhance business performance for occupants and uplift collection rates,” Revitus observed.
This is happening at a time when several property development firms are carrying out a portfolio diversification, aiming to build office parks, supermarkets and industrial parks out of the CBD.
In terms of performance, Revitus Property Fund recorded a US$102 636 profit in the first quarter to March 2024 while net asset value closed the period at US$22 539 020.
The achieved profit for the first quarter was 81 percent above budget and the growth trend is expected for the rest of the financial year.
Revitus Property Fund declared a maiden interim dividend of US$ 45 804 paying 0,012 US cents per unit for the quarter ended March 31, 2024.
The Revitus Real Estate Investment Fund is a pooled property investment vehicle that was established under the auspices of the National Railways of Zimbabwe Contributory Pension Fund through the seeding of five commercial properties as the initial assets of the Fund.
The Revitus REIT is licenced and registered as a collective investment scheme by the Securities and Exchange Commission of Zimbabwe, under the Collective Investment Schemes Act.

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