LOCAL pension fund, Unified Councils Pension Fund (UCPF), intends to raise more than US$3 million through a private placement to build a new hotel in Victoria Falls, NewsDay Business can report. UCPF is a retirement fund that operates prime land in Victoria Falls valued at US$1 million. A prospectus prepared by UCPF financial advisors, Switzview Wealth Management, showed that UCPF intends to raise a total amount of approximately US$2 995 726,40 by way of a private placement. UCPFs proposed investment in a hotel project comes after the Zesa Pension Fund and Cresta Hotels partnered to build a four-star hotel in Victoria Falls through the Mosi-oa-Tunya Real Estate Investment Trust.
“The Unified Councils Pension Fund is a retirement fund operating in Zimbabwe that has prime land in Victoria Falls, valued at US$1 000 000. UCPF is considering investing in a hotel and is inviting prospective investors to participate or co-invest in the project,” the prospectus read.
“UCPF intends to raise a total amount of US$2 995 726,40 by way of a private placement, representing a 49% equity stake in the project.”
The generated funds will be used to build a three-star hotel.
The project has since obtained an environmental impact assessment approval, development permit approval, plan approval, detailed architectural designs, title deeds, property valuation report and the prescribed asset status, among other requirements.
Switzview corporate finance manager Batanai Matsika told NewsDay Business at the Zimbabwe Association of Pension Funds 5th edition of the Principal Officers and Chairman’s Convention in Bulawayo that constructing the three-star hotel would cost US$6,1 million.
“So, because of their cash contribution, which represents 16% of the cost (US$976 000), they would top up the other US$2,1 million and that will give them 51%. So, the other 49% is basically US$3 million that we are capital raising for,” he said.
“That would give investors a 49% share in the hotel. Cresta Hotels will be the operator and will be managing on a long-term basis. It’s going to be a 57-bed hotel. And it has a strategic location. In terms of the projected rate of return, we’re looking at 18,58%, which is a very good rate of return and a payback period of 12,4 years. So everything has been put in place.”
Cresta Hotels already operates six other hotels, which include Cresta Churchill (Bulawayo), Cresta Sprayview (Victoria Falls), Cresta Jameson, Cresta Lodge and Cresta Oasis (all in Harare) as well as the recently opened Rupurara in Masvingo.
Matsika said the fact that the project had prescribed asset status meant insurance companies and other pension funds could also participate or co-invest with UCPF in the development of the project.
“We’re now in the capital raising phase. So, once we secure or we receive commitments, we are hoping to start the project in February and it will take roughly 18 months to complete the whole project, about one and a half years. But from that time, of course, the operator will come through and start to manage,” he said.
“We think there’s a strategic logic to attract like-minded pension funds because this is a project that’s being run by UCPF, so there’s a strategic fit in terms of alignment and all. It would make sense for other pension funds to come in. But any other investor is open.”
