WestProp brings US$201m land back to market

KURA CHIHOTA

WestProp is bringing a US$ 201 million land bank totalling 460 hectares to the Zimbabwe investment market.

Although 30 million shares are to be listed on the Victoria Falls Stock Exchange on April 29, only 1 million are available to the public for purchase.

To achieve the dream of 1 billion bricks by 2050 they seek to raise US27 million to start the development process.

This shall be in the main raised by a convertible, redeemable, preference share. Essentially the preference shareholders provide capital for minimum 5 years to the company in return for a preset 7.5% yearly return on purchase price and 10% of the declared dividend.

The ordinary shareholders have no guaranteed return but participate in the upside of any capital appreciation of the land and 90% of the dividends declared. Current guidance is that unlike a REIT where 80% of profits MUST be paid out, the developer has set a 30% dividend policy (30% of the profits will be paid out to shareholders, the balance retained in the company.

The investment is purely a development play, meaning the source of the profits of the company will come from sales of the development of the land banks.

The company has multiple products from vacant residential land, to flats, townhouses and freestanding houses, a hotel and golf course stands and commercial developments in the pipeline.

The ordinary share offering is for those with a high risk tolerance as the revenue is driven by successful sales continuing to be realised.

Most Zimbabweans are used to smooth income earning property funds paying out regular cash flows generated from tenants paying on leases.

The preference shares offer a stable 7.5% return for 5 years with some profit participation but no capital appreciation.

Subscribers to this offer place a vote on WestProp’s ability to extrapolate their historical sales success into the future.

Kura Chihota is a regional property consultant. He can be contacted on kura.chihota@gmail.com