Masholds property value shrinks
LIVINGSTONE MARUFU
Listed property investment and development firm Mashonaland Holdings (Masholds)’ market property value shrunk in the year to September 30, 2020 as some buildings that depreciated due to lack of maintenance during the Covid-19 period.
The value shrunk 5% to ZWL$8.98bn during the reviewed period from ZWL$9.4bn in the prior comparative period.
The property sector was one of the most hit sectors by the Covid-19 pandemic as most businesses remained closed from April to August and many property entities are failing to recover.
EPG Global undertook a comprehensive valuation of Masholds properties.
“The decrease in portfolio value means the rental growth in real terms lagged inflation during the year,” Masholds board chairperson Grace Bema said.
The company recorded a loss of ZWL$372.5m from a profit of ZWL$7.1bn recorded during the same period last year due to lockdown effects which led to closure of many companies for over five months.
Bema said despite coronavirus challenges the effect on the property market was not as dire as initially anticipated as there was reasonably resilient occupancy and collection levels.
The company scaled down business operations due to the pandemic meant that most tenants did not absorb upward rent reviews in a hyperinflationary environment, especially, when their businesses had been closed for an extended period due to lockdown.
Masholds said a key challenge for property development is that construction costs remain high while property market values are falling.
Revenue for the year increased by 30% to record ZWL$173m during the reviewed period from ZWL$133m in the same period last year due to rental reviews implemented during the year.
The growth in occupancy levels to 79.2% this year from 77% last year also contributed towards revenue growth due to an opening up of the economy due to the relaxation of lockdown rules by the government.
Bema said the company remained focused on the tenants’ attraction and retention strategies.
Operating expenses to revenue ratio marginally improved to 50.1% from 50.3% as management exploited cost save opportunities to protect profits.
Operating profit to revenue however declined by 18% to 59.3% from 71.9% due to decline in other income which declined by 45% to ZWL$16.2m from ZWL$29.5m and this is due to lower dividends received from equity investments during the current year compared to last year.
The configuration of Charter House into a boutique hotel will be resumed early next year with onsite works expected to start in the first quarter of 2021, Bema said.
Bluffhill Cluster Housing project is set to resume next year following the conclusion of tender processes with bricks and materials to complete the projects already delivered to the site.
