MASHONALAND Holdings Ltd has spent $4,2 billion sprucing up several of its properties including Harare’s Intermarket Centre, snapped up for $5,2 billion from Southampton Properties (Pvt) Ltd.
However last week Masholds chief executive officer Justin Dowa said his company was now taking legal action against Intermarket Holdings Ltd to recover $18 billion owed by the insurance giant.
Intermarket swallowed Southampton in a major take-over.
Masholds, in its maiden results for the year ended March 31, said four billion of the $4,2 billion was applied towards the refurbishment of the interior of Intermarket Centre.
“An amount of $4,2 billion was spent on refurbishment and upgrading works on a number of owned properties in an effort to enhance their revenue generating capacity and capital values, in addition to improving their market position,” Dowa said in his report.
“$4 billion of this amount was applied towards the refurbishment of the interior of Intermarket Centre. This exercise forms part of a lease restructure programme designed to align some of the older, inherited leases with current lease requirements and market conditions in order to bolster future income flows.”
Masholds told shareholders last year that it intended to go on a $31,8 billion shopping venture to acquire various prestigious properties countrywide.
The properties included Charter House ($3,7 billion), Intermarket Life Towers ($11,5 billion), and West End Clinic ($1 billion).
Dowa said the first six months of the financial year reflected the company’s new direction in the property investment and development field following the restructuring and rights issue, which took place in November 2003.
“We should begin talking when we issue our mid-year results,” Dowa told businessdigest in an interview. “Right now however the property market is quiet.”
He said a total of four properties with a combined value of $4,5 billion had been acquired.
All the properties which are located in the suburbs of Harare fall into the category of development land and enjoy potential for either office park or residential development.
“Only one of the purchases with a value of $797 million is captured in the interim financial statements,” he said. “The new acquisitions are in line with the company’s thrust to actively participate in property development.”
He said results for the half year to March 31 were based on rental income received from the newly acquired buildings and properties, mainly in Harare, as well as a contribution from previously owned Masholds properties in Graniteside and Ruwa.
Turnover was $763 million representing rental income.
Profit before tax amounted to $48 billion.
“Included in current assets is an amount owed to Mashonaland Holdings by Intermarket Discount House ($16,7 billion) and Intermarket Banking Corporation ($1,6 billion) currently under curatorship of which a provision of $4 billion has been made in respect of interest accrued on this investment,” Dowa said.
Mashonaland Holdings issued a cautionary notice to shareholders on March 19 following the placement by the Reserve Bank of Zimbabwe of Intermarket Discount House and Intermarket Banking Corporation under curatorship.
“Appropriate legal action is at hand to recover the $18 billion owed and meetings have been held with the curator,” Dowa said. “The directors are hopeful of a satisfactory outcome.”