Tigere to buy 100pc of Highland Park Phase 2
Tigere Property Fund is set to acquire 100 percent stake in Highland Park Phase 2 in Harare, as part of the fund’s strategy to generate income and grow capital through the acquisition of income-generating real estate investments.
The shareholding Tigere intends to buy is presently held by Modern Touch Investments.
In a circular to unit shareholders, Tigere said the transaction would be settled exclusively through the issuance of new Tigere REIT (Real Estate Investment Trust) units to be allotted to Modern Touch Investments.
The proposed acquisition of Highland Park Phase 2 from Modern Touch Investments is a related party transaction in terms of the Zimbabwe Stock Exchange (ZSE) listings requirements because Modern Touch Investments is an associate of Frontier Real Estate, a significant unit holder in the Tigere REIT at the time of issuance of the circular.
Consequently, Frontier Real Estate will be precluded from voting at an extraordinary general meeting (EGM) to be held on August 29, 2024, on the resolution regarding the proposed transaction.
Tigere said in line with its strategy, the manager and trustee had identified Highland Park Phase 2 as a suitable asset for inclusion into the Tigere REIT.
“The inclusion of Highland Park Phase 2 into the REIT is expected, inter alia, to provide a yield-accretive impact on the REIT and offer strong counterpart lease diversification as well as improve the net asset value (NAV) growth of the Tigere REIT,” reads the circular.
Tigere added that the transaction would also strengthen the offering at the existing phase 1 of Highland Park.
Tigere REIT manager and its advisory board made a final purchase offer of 351 282 000 units to Modern Touch Investments (Private)Limited, the developer and owner of Highland Park Phase 2, provided that a12-month US dollar-backed income guarantee is agreed by the parties. The seller has provided the fund with standing lease agreements to this effect.
The real estate investments will be used to generate a return for the unit holders by investing in both accretive completed real estate acquisitions and new development activity to deliver on its mandate.
“The Tigere REIT shall further have infrastructure development goals to drive economic growth within the regions it operates in. Ultimately, it is the goal of the Tigere REIT to ensure stable income generation through investment in quality real estate assets backed by long-term leases,” reads the circular.
According to Tigere, a market value of US$10,825 million was determined for Highland Park Phase 2 by an independent property valuer.
Tigere said following the completion of Highland Park Phase 1 in June 2022, there was a request by consumers for an improved food and beverage offering as well as additional convenience stores such as banks and a pharmacy.
It said phase 2 was subsequently developed to satisfy this excess demand, and construction on phase 2 started in November 2022 and was completed in December 2023.
“Thirty seven percent of Highland Park Phase 2’s income is generated by entities operating under the Simbisa Brands umbrella.
“Exposure to large listed multinational tenants (FCB, CBZ,and Simbisa) provides diversification of risk and stability in rental in come for the asset,” reads the circular.
“Additionally, as a sub-anchor tenant, Booties Pharmacy offers an inelastic demand-driven business model owing to its solidified position as a leading brand within the pharmaceutical industry.”
Tigere said the target property’s tenant mix therefore aligns with the fund’s over-arching objective of providing an attractive risk-adjusted, hard currency yield with a low expense ratio and consistent dividend flow.
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