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Masholds to increase share capital

Ngoni Chanakira

MASHONALAND Holdings Ltd (Masholds), which intends to transform itself into a dedicated property investment and development company

using its Zimbabwe Stock Exchange (ZSE) listing, now wants to increase its share capital before embarking on the deal.

Stock market analysts said Masholds intended to hold an Extraordinary General Meeting (EGM) to increase its authorised share capital from $125 million to $1,25 billion.

They said if this was approved at the EGM scheduled for October 30 it would enable Masholds to acquire property listed in a circular scheduled to be released to shareholders today.

On Wednesday the company issued yet another cautionary statement signaling that the move to venture into the property market could be before year-end.

The first cautionary notice to shareholders was issued on August 19.

Masholds asked shareholders to exercise caution in dealing with its shares because negotiations were ongoing which could materially increase the company’s asset base.

The company’s share price stood at $55 on Wednesday.

Another top ZSE-listed company Shingi Munyeza’s Zimsun Leisure group has also successfully ventured into the now lucrative property market by separately listing Dawn Properties on the bourse.

Dawn shares traded at $58 on Wednesday, while those for Zimsun were $81.

Several local firms are now investing in the property market sending prices sky high as they try to hedge against spiraling inflation.

Zimbabwe’s inflation presently stands at 426,5% but economists predict it will continue soaring and hit the 1 000% mark by year-end.

Masholds chairman Godfrey Gomwe told shareholders on March 31 that the new initiative would offer investors an opportunity to make sound returns as the property sector was paying high dividends.

The chairman, who sits on several company boards, has seen the loss making Masholds turn its fortunes around.

The company’s turnover for the six months ended March 31, at $15,1 million, was generated from rentals received.

Mashold’s operating loss from continuing operations of some $27 million was reduced to $12,5 million. The company has a market value of $7,8 billion on the ZSE.

“The outlook remains difficult under current economic conditions,” Gomwe said in his statement accompanying the results. “However, the board feels optimistic about the long-term prospects for the company if suitable properties can be acquired. Property investment portfolios generally represent a sound hedge against inflation and a new initiative in this regard would offer investors an opportunity to make sound returns.”

He said only the Masholds properties division continued to operate, the rentals from which along with investment interest, provided current revenues for the company.

“These are insufficient for long-term sustainability and the board has decided, in principle, to actively pursue the transformation of Mashonaland Holdings into a dedicated property investment and development company, using its listing on the ZSE to this end. Considerable interest has been shown in this concept and shareholders will be advised of progress in due course,” Gomwe said.

Property markets last year registered high growth levels with residential housing prices increasing more than three-fold, largely due to demand-push effects of depreciated parallel market rates.

The rates saw most Zimbabwean nationals working abroad seeking to acquire properties locally.

Analysts said contributing to this growth were the portfolio-rebalancing effects of high inflation, as economic agents sought to protect their wealth from negative real returns in money markets by ploughing their savings into the “self-indexing” properties market.

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