Pearl Properties has reported a good performance for the eight months to August 31 2013. Revenue was 0,41% above budget at US$5,985 million.
In a trading update, Pearl’s finance and administration general manager Paddy Chigunduru said profit after tax for the eight months rose to US$2,86 million, 5,3% above budget of US$2,7 million.
Property expenses grew 8,41% to US$767 000 while administration expenses went down US$2,35 million, a figure 2,02% below budget.
In the half year to June 30 2013, Pear reported that its after tax profit grew due to a better than expected performance on property expenses.
“We made a significant positive variance arising from improved letting as well as some specific write off that passed through,” Chigunduru said.
In the six months, Pearl reported a 6,9% revenue growth to US$4,5 million, compared to US$4,2 million, spurred by a 14,5% growth in office park revenue and a 1,3% rise in CBD office revenues.
Chigunduru said net property income went up 8,4 % to US$3,86 million compared to US$3,56 million in the same period in 2012. This was after incurring property expenses of US$657 000 and US$648 000 in the first half of 2012 and 2013 respectively.
Profit after tax was US$1,97 million, down from US$2,1 million in the same period last year.
Rental yield went down by 2,4% from the same period last year to 8% while the occupancy rate stood at 79,6%, 0,1% up from 79,5% last year.
Chigunduru said rental reviews had been very difficult because of liquidity challenges.
Average rental charges for the period went up by 7,3% in the six month period under review to US$7, 9/m2.
As a result of tight liquidity, collections were also a challenge for the property sector.
Pearl’s total costs to revenue stood at 55,2%, down from 56,4% but below a company target of 45%.
“As already indicated rental yields are becoming increasing softer due to low average rental growth. The occupancy rate pretty much mirrored what was happening in 2012,” Chigunduru said.
Factors that contributed to softening of rental income included an increase in property values from previous period, which were way above rental growth and that new lettings had proven difficult.
Giving an update on projects, Pearl developments general manager Christopher Manyowa said the Kamfinsa cluster housing scheme was underway, with a model three bedroom unit having been finished.
“In terms of the actual project we are looking at finishing off construction of 7 units which are 70% complete. We now have on site specialist contractors doing the finishing, plumbing, electrical fittings and painting, and we expect the 7 units should be complete by the end of this month,” he said.
Manyowa said the company had already started preliminary work on six units which should be completed by December 2013.
The estimated selling price was US$140 000, with a return of at least 20% after factoring in construction, land and development costs of US$100 000 and taxes of about US$20 000.
The entire Kamfinsa complex would comprise 39 units with the balance to be delivered in 2014.
Currently, Pearl is working on a number of prospective projects, including a bus terminus which has been approved in principle by the City of Harare.
“We have an appetite for return driven mainly by commercial development; so we are on the ground looking for potential sites,” Manyowa said.
“We are also looking at embarking on low income housing.We have approached a number of local authorities in that respect and we are also looking at private land owners.”