ZSE listed First Mutual Holdings (FMH) has reviewed rentals paid by its tenants downward to increase occupancy levels and circumvent voids in its property business.
With most tenants evacuating the Central Business District owing to high rental costs, FMH CEO Douglas Hoto told businessdigest on the sidelines of the company’s Annual General Meeting on Tuesday that property rentals had been reviewed to mitigate empty space in its property portfolio.
“I think it’s not that simple, but we negotiate with tenants and in some instances rentals have been reduced, though they cannot go below the cost of maintaining the buildings. Where there is good case for a relook at the rental, yes we do so,” admitted Hoto.
According to Hoto, the vacancy rate for the properties portfolio was pegged at 20,5% with about 79% of the property occupied by end of April this year.
Property expenses were 24% higher than the 2014 first four months, rising from US$287 000 to US$356 000 due to maintaining buildings that were not occupied.
Rental income to April decreased by 5% from US$2,6 million last year to US$2,5 million this year.
In spite of the economic challenges besetting the economy, Hoto said the company seeks to maintain a 12% market share at the company’s subsidiary, First Mutual Life Assurance Private Ltd.
“First mutual life is doing ok.
Its ahead of its budget in terms of revenue for the first four months of the year. The claims ratio are looking good at about 25% and its showing profit for the first four months of year.
“Our premium has remained more or less like as they were last year. We are more looking at maintaining our share of the market even in the face of economic difficulties,” he said.
Of the US$38 million revenue recorded by the entire group in the first four months of 2015, 25% came from its life business, First Mutual Life.
In the same period, FMH’s total income grew by 1% from US$37,8 million last year to US$38 million by end of April 2015.
During the period under review, operating profit for the company surged by 1 090% from US$89 000 to US$1 million.
Profit after tax tumbled by 12% from US$1,1 million to 979 000 during the same period.
According to the 2014 Insurance and Pensions Commission report, First Mutual Life was ranked third in the industry accounting for 12 % of the total market share.
Other FMH subsidiaries are FMRE life and Health, Tristar Insurance company, FMRE property and casualty, Pearl properties, African Actuarial consultants, First Mutual Health Company and First Mutual wealth management.