As many Zambian businesses took rest during the festive season to recharge their batteries for 2018, one player on LuSE was conferring with Father Christmas on how best to gift its shareholders. Seriously though, in line with their business strategy of having a diverse portfolio, REIZ spent its “down time” consolidating its position as leader in the property industry by adding an additional asset to its balance sheet.
REIZ has now acquired Southview Park situated on Subdivision “G” of Farm No 4300, Kafue Road in Lusaka (effective 28 December 2017). According to SENS Announcement from the company, the property is currently developed with 22 high cost 2 to 4 bedroom units measuring 168 to 200 square meters with development potential to build out another 82 houses. In addition, it includes office suites that are 1000 square meters and a small neighborhood retail complex of 2400 square meters. Total Land size is 11.4 Hectares (28.3 acres).
Although REIZ has been known to pay a considerable dividend to shareholders, making this acquisition must have been easily approved as the company opted for using proceeds from its retained earnings as opposed to debt (this is something shareholders vote on at annual general meetings). This move is a clear indication that the company has shareholder value in mind when it comes to its investments.
The deal is worth US$5,200,000 net of all taxes and the profit projections are estimated at 6.67% from 2018. Aside for the small matter of conditions precedent for the deal to be wrapped up (which include Competition Protection Commission approval and State’s consent to assign title to REIZ), the company has reaffirmed its commitment of remaining a going concern. This is evident from their decision to refurbish and upgrade Arcades shopping mall and making a considerable investment in increasing their asset base with a purchase that will give them an opportunity to further grow their portfolio (that extent of land that remains un-development).
Investments in companies of this pedigree are for the long term. Hence shareholders will be keeping a close watch on the earnings per share (EPS) of their investment. Needless to say, the proverbial saying in Zambia is that “property never depreciates, it just increases in value”. Investors will certainly be hoping for an upward trend in their investment in REIZ.