LIVINGSTONE MARUFU
Listed property investment and development concern, Mashonaland Holdings (Masholds) says it benefited from the United States dollars rentals, which saw the company recording a 47% increase in revenue in the first quarter to December 31, 2020.
Revenues for the group stood at ZW$66.2m from ZW$44.9m recorded in the comparative quarter to December 31 2019, driven by rental reviews. There was improvement in the occupancy levels which rose to 79.4% during the reviewed period from 77.7% reported in the prior comparative period.
Consequently, operating profit climbed by 18.9% to ZW$36.4m from ZW$30.6m reported in the comparative period.
However, the operating profit margin decreased by 19.5% due to reported increases in operational expenses.
Operating expenses increased 59% to ZWL$30.7m in the reviewed period. This was attributed to movement in unofficial market exchange rates which had a bearing on the Zimbabwe dollar value of materials and services consumed by the company as service providers continued tracking premium exchange rates in the pricing of products and services to hedge against inflation.
“Statutory Instrument 85 of 2020, which had been put in place earlier, allowed sellers and service providers to freely market their goods and services, and transact in the US$ currency. In the occupier sub-market most tenants were able to pay-up the rent arrears that were deferred during the lockdown period,” MD Gibson Mapfidza said in a trading update for the quarter.
“This propelled the sub-market, which had earlier in the year suffered lethargic rental growth and rent payment deferments.”
He said inflation however remained significantly high and, as such, the asset class failed to hedge against time value losses.
The property market fundamentals remained depressed due to the difficult macro-economic climate and low business confidence.
The occupier sub-market was affected by low demand for office space; this in turn had an impact on development activity.
The limited development activity and sales transactions on the market have remained concentrated in the residential sector.
The property investment portfolio value remained at an inflation adjusted valuation of ZWL$10bn determined from the last valuation performed as of September 30 2020.
Mapfidza said the development of the Bluff Hill cluster housing project is on-going with the construction of a model house having commenced in February 2021 and all the necessary approvals and development permits are now in place.
The company continues to pursue selected property developments including Lot C Galway – the mixed-use sub-division layout and report is now at an advanced stage for final submission and approval and 9 Natal Office Park- value engineering to ensure project viability is underway.
Charter House reconfiguration, Mapfidza said, the finalisation of designs is underway and commencement of the project is dependent on the Covid-19 containment.
The compliance certificate for Windsor Park has been obtained and selling of stands is now underway.
Masholds said the company has implemented measures to ensure business continuity and mitigate against the negative effects of Covid-19.
The company has recorded a marginal improvement in occupancy levels despite the overall softening demand for office space.
The company is proceeding with its selected low risk projects to diversify income streams.
Mapfidza said the company will continue to preserve value by pursuing its property development projects in line with the broader company strategy while continuing with efforts to retain existing tenants and secure new leases to sustain overall business performance.
