Revenue in the period grew from US$2,6 million recorded in 2011, largely helped by the 26% increase in rentals during the period under review. Average rentals for the group were US$5,6 per square metre, up from US$4,18 in the comparative period in 2011.
Group profit grew by 39% to US$1,9 million, up from US$1,4 million posted in the previous year. Earnings per share rose to 12 US cents from 8 US cents the same period last year.
Mash Holdings chairman Elisha Mushayakarara said the rental growth was driven by positive lease negotiations.
“Management is aware of the uncertainties in the macroeconomic environment and expects the future rent negotiations to be largely reflective of these circumstances,” Mushayakarara said in a statement accompanying the company’s financial results.
Net property income rose to US$3,2 million from US$2,3 million despite liquidity constraints in the economy.
The growth in revenue, however, was against a vacancy rate that went up by a percentage point to 8%, which the company attributed to an increase in the total cost of occupancy, owing to a sharp rise in electricity charges. Average portfolio yield remained at 9%. The industrial and residential sectors achieved yields of 11% and 7%, respectively, while office, retail and specialised health space yielded 9%.
However, property expenses went up to US$349 000, representing 10% of revenue, up from US$285 000 in 2011. The company attributed the 18,3% growth in property expenses to an ongoing refurbishment programme to modernise lifts and amenities which is financed by internal resources.
Persistent liquidity challenges coupled with lack of robust economic growth drivers continued to slow down business in the sector with some tenants facing challenges in paying rentals.
Finance minister Tendai Biti recently attributed 70% of the inflationary pressures in the economy to high rentals in the first quarter of the year. He said rising electricity and water bills remained high risk factors likely to erode disposable incomes.
This could partly explain cumulative rental arrears of US$508 000 owed to Mash Holdings. In the period under review, debts totalled US$167 000, while US$348 000 was brought forward from the previous year, which the company said it would proactively manage.
“We have already secured favourable judgement on a significant number of cases like long outstanding debtors and progress on the remainder is satisfactory”, Mushayakarara said.
He lamented that the absence of appropriate real estate financing instruments continued to curtail activity in the real estate sector.
The company said inconsistencies in the operating environment in the period under review raised the country’s perceived risk, which negatively impacted on the general business confidence.
In addition to a number of developmental projects that are on the planning stage, Mash Holdings says it will continue to seek value-creating opportunities.