HomeBusiness DigestDawn's portfolio up 6 000%

Dawn’s portfolio up 6 000%

Paul Nyakazeya

Listed property concern Dawn Properties’ portfolio value increased by 6 000% to $13,6 trillion during the year to March 2006, the company’s re

sults revealed this week.

Dawn Properties chairman, Farai Rwodzi, said the increase in the value of the group’s portfolio had been spurred by “a fair state of repair”.

“CB Richard Ellis placed the value of our portfolio at $13,6 trillion, representing an increase of just under 6000%,” Rwodzi said in a statement accompanying the company’s results.

“As part of the valuation process our valuers inspected the properties and found them to be in a fair state of repair. The properties have a gross replacement value of $47,5 trillion and a depreciated replacement value of $23,9 trillion,” said Rwodzi.

The property concern’s turnover grew by 690% to $45,8 billion during the year, ahead of average inflation of 428% for the same period.

About 80% of the turnover was realised in the second half of the reporting season.

The company attributed the increase to the devaluation of the local currency and the re-negotiation of its lease agreements to include food and beverages revenue in the base computation of rental income.

However, increases in operating costs lagged behind revenues at 533% to $23,5 billion. This resulted in a cost to income ratio of 51%, representing an increase of 13% on the prior year ratio.

While as a long-term investor the company does not focus on short-term performance, this real growth in capitalisation has allowed the company to effectively use equity as an efficient currency for acquisitions.

The company said it was pursing two acquisitions which would enable it to enter regional markets while at the same time adding significant cash flows and diversification to its portfolio.

“A memorandum of understanding has been signed for the acquisition of a leading real estate services provider in Zimbabwe,” Rwodzi said.

“The target entity has sizable operation in the Sadc region. Focus will be on growing the business both regionally and locally,” Rwodzi said.

The company has also signed a purchase agreement in respect of land in the New Marlborough area, with a blue print to develop 1 100 500sqm stands. About 80 stands are partially developed.

“The purchase consideration for both transactions will be met by the issuance of the company’s linked units. The number of units to be issued is below 5% of the units currently in issue and therefore, in accordance with the Zimbabwe Stock Exchange rules. Shareholder approval is not a prerequisite,” he said.

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