Zimre Property registers $116 m profit after improvement in rental collection

ZIMBABWE – Property concern, Zimre Property Investments Limited (ZPI), registered $116 million profit for the half year to June 30, 2019, from a loss position of $0.2 million reported in the same period last year.

While the Zimbabwe Stock Exchange-listed firm generally managed to up its performance, doubling its revenue to $3.37 million after improvements in rental collections and occupancy at some of its properties.

ZPI manages over 20 buildings and is also involved in major property and housing developments across the country.

Company chairperson, Ms Jean Maguranyanga, said while the economic environment remained challenging, currency reforms initiated by Government in the period “resulted in investment property values increasing substantially in Zimbabwe dollar terms”.

During the period, Government outlawed use of multiple foreign currencies in the country for everyday transactions and re-introduced the Zimbabwean dollar.

“As a result, there was a fair value adjustment of $121.80 million, which gave rise to a profit of $116.57 million for the period,” Ms Maguranyanga said.

The currency changes, however, came with their fair share of problems for the sector, which included contract re-evaluations and rentals, which had been fixed in United States dollars.

“Contractors began to insist on contract re-evaluations to mitigate value losses, while revenues, particularly rentals could not be immediately adjusted to match the exchange rate and inflation spikes,” she said.

“There was therefore a loss of revenue values in real terms and property yields tumbled.”

She said leases had since been adjusted to “provide latitude for adjustments that embrace developments in the economic environment”.

In the period, the firm decided not to declare a dividend to focus on completing works at its shopping mall in Victoria Falls, which has since been completed.

Earnings per share recovered to 6.79 cents from a negative 0.01 last year.

“Currently, the mall is trading at 60 percent of its lettable space and is expected to reach 90 percent by end of September,” she said.

On the outlook, Ms Maguranyanga said the performance of the property sector was likely to remain subdued due to high costs and weak demand.

“We expect a turbulent time that will have some negative impact on rentals and property returns in this period as the economy adjusts to the new currency changes and other statutory interventions,” she said, while emphasising the firm remained positive about the future of real estate in the country. — New Ziana

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