Public Service Pension Fund buys Monomotapa Hotel

The Public Service Pension Fund’s (PSPF) move to acquire the Monomotapa Hotel shows how hungry pension funds remain for commercial real estate – even those of a risky kind – as investment options remain limited.

The US$18 million acquisition will place the PSPF among the country’s most influential institutional property investors.

The hotel, a flagship of Harare’s skyline, was put on sale as part of African Sun’s ongoing disposal of underperforming assets.

“Independent valuations conducted by licensed property consultants and international hotel valuers have placed valuations within scope and acceptable range with the sellers, African Sun,” says Farai Gaba, PSPF’s chief investment officer.

The Fund is to acquire the hotel property, including the adjacent car park, where African Sun previously planned to expand its property.

African Sun says: “The transaction involves two parts: Monomotapa Hospitality (Private) Limited, in which the Public Service Pension Fund has an interest, will acquire the hotel business and associated assets, while the Public Service Pension Fund will directly acquire the hotel land, buildings, and car park, as a single, integrated transaction.”

The acquisition reflects how pension funds still see property as the best pillar to anchor portfolios.

This is despite the risk that a CBD hotel such as Monomotapa is likely to pose for its new owners. Occupancy has been falling, and, as African Sun points out in its last financials, conferencing business from NGOs is down due to foreign aid cuts and tight liquidity locally.

But Gaba says the purchase fits into PSPF’s push to diversify its portfolio by sector and asset class, while generating stable returns for pensioners.

“The fund maintains a diversified portfolio across asset classes including real estate, infrastructure, equities, fixed income and offshore investments, which are designed to reduce risk and enhance long-term returns,” says Gaba.

PSPF manages over US$600 million in assets, with about 15% held offshore to hedge against currency risk. The fund targets average annual returns of 7.5%.

The fund’s more recent property investment include the Madokero Creek residential estate, the adjacent Madokero Mall, Madokero Industrial Hub Warehouses and the Varsity Heights student housing project in Chinhoyi.

PSPF is also a co-investor in the Bulawayo Student Accommodation Complex.

This strategy reflects how Zimbabwe’s institutional investors are responding to limited capital market options and inflation risks by turning to real estate.

According to the Insurance and Pensions Commission (IPEC), property accounts for 47% of pension fund assets.

Data from the Securities and Exchange Commission of Zimbabwe (SECZIM) shows that real estate made up 48.45% of funds under management by asset managers in Q1 2025, up from 47% in the previous quarter.

Trimming its portfolio, African Sun recently sold Great Zimbabwe Hotel to the Mewame Trust, owned by businessman and City Link bus operator Jackson Makarachi, for US$4.2 million.

A previous deal with former RBZ governor Gideon Gono’s TD Hotels collapsed.

African Sun is also offloading the Caribbea Bay Hotel in Kariba. It plans to use the money from the sales to renovate the remaining hotels.

Last year, it fixed up Hwange Safari Lodge, while major revamps are planned for Holiday Inn Harare, Elephant Hills, Troutbeck Timeshare Lodges, and the Victoria Falls Hotel, which it co-manages with Meikles. African Sun has hinted it may consider buying out Meikles’ share in that joint venture.

NewZwire