Listed property concern, First Mutual Properties (FMP), reported a loss of ZWL$82.5m for the quarter ended March 31, 2021 from a profit of ZWL$1.6bn achieved in prior comparative period largely due to stringent lockdown measures imposed by government in response to the second wave of the Covid-19 infections.
But FMP’s revenue jumped by 26% to ZW$90.2m in the first quarter to March 31, 2021 despite a generally difficult operating environment from ZW$71.6m reported in the corresponding period last year. Management attributed the improved numbers to rent reviews, higher turnover rentals.
FMP said while the company experienced low demand for offices in the central business district (CBD), the retail, industrial sector and office park was resilient and registered a steady demand.
“The lockdown early in the year delayed rent review efforts, hindered collections and planned maintenance initiatives,” FMP said.
Despite the slow start to the year, the occupancy levels improved by two percentage points to 89% from 97% as deliberate efforts to improve space quality yielded positive results.
Collections deteriorated during the period under review to 57% from 78% in December 2020 as tenants were affected by lockdown measures.
Total income was 7% higher than the prior year reflecting positive returns on listed equity investments, despite fair value losses on investment property.
During the quarter, FMP spent a total of ZWL$ 7.04m on repairs and maintenance alone in an effort to improve space quality and accelerate leasing efforts hence property income also grew albeit at a slower rate of 331% during the period compared to the prior year’s same period.
Investment properties at 31 March 2021 were valued at ZWL 9.663bn following a directors valuation, representing a 3% increase from 31 December 2020.
FMP expects low demand for space in the CBD to continue as it is in excessive supply with rental yields expected to remain weak.
“The commercial real estate segment is expected to remain an occupier market due to excessive supply of space.
“Despite expected growth in economic activity, the property sector is traditionally the slowest to react due to the nature of the asset. Rental yields are expected to remain weak due to the slow nature of price discovery of rentals, coupled by limited upside on rentals due to excess supply of space, while recent revaluations of properties will apply pressure to any growth in yields,” FMP said.