ZIMRE Property Investment’s (ZPI) financial result for the interim period ending June 30 2009 summed up the country’s property sector’s performance which was depressed during the period under review.
Management at the company said real estate uptake was constrained during the interim period with vacancy and debtors levels rising.
“Over the period under review, debtors levels rose to 50% of collections on the back of tenants’ inability to pay hard currency rentals while vacancies increased to 7% as existing tenants either rationalised space or moved out of properties,” ZPI said.
Rental rates per square metre in Zimbabwe were hovering around 20% of regional averages.
Averages rentals where reported to be US$4 per square metre for office space, retail space was attracting US$6 per square metre while industrial space attracted US$1,50 per square metre.
The effective yield was 3,5% against the regional average of 13%. Management’s valuation of the company’s property portfolio was US$40 million.
“Local residential property prices were reported to have plunged by at least 30% owing to the lack of liquidity on the local money market coupled with the inability of financial institutions to provide mortgage or structured financing facilities,” ZPI said.
There were no prime commercial properties on the market owing to the illiquid money market and lack of structured financing facilities coupled with the fact that current owners have taken a long-term view towards their property investments and are not willing to dispose at the current depressed prices.
The company’s Bulawayo Parklands extension project which was purchased and developed with IPO funds was issued with a certificate of compliance by the local authorities. This laid the ground for construction of structures on 136 stands with an estimated market value of US$1,3 million.
Total revenue earned for the period under review was US$1 132 947 while other operating income amounted to US$1 395 leading to total income of US$1 134 342. Expenses were US$439 263 resulting in an operating profit of US$695 079. Investment income contributed US$14 097.
“A fair adjustment value of US$1 094 404 was charged to the financial statement. Of this amount, US$2 154 500 was charged for the impairment of investment properties while a positive adjustment of US$1 060 096 was made to reflect the increase in quoted equities,” the group said.
A loss before tax of US$385 228 was realised before a tax credit of US$397 930 was pushed through the financial statements. The tax credit was the net effect of current tax expenses of US$254 894 and deferred tax expenses of US$652 824 which, resulted from a different intake on values and tax expenses charged to the income statement. This resulted in a profit after tax of US$12 702.
Cash flows from operations were US$296 417 while cash flow from investing activities were US$163 614 of which investments worth US$14 097 were sold and US$164 000 was spent on the purchase of investment income.
Cash flow from financing was nil resulting in a net cash position of US$140 481.