LISTED Pearl Properties is tying up loose ends with its offshore financiers to fund the US$50 million Fourth Street bus terminus upgrade project, a company official has said.
By Fidelity Mhlanga
The real estate firm signed a joint venture agreement with the City of Harare to construct a US$50 million bus interchange project last year.
Pearl properties MD Francis Nyambiri told businessdigest on the sidelines of the firm’s annual general meeting on Tuesday the project’s fundraising was underway. He added that the firm was engaging with various offshore financial institutions to kick -start the project before year end.
“It’s work in progress. We are at the fundraising stage. All other things have been taken care of. It’s still confidential to talk about the money we have raised so far”, he said. “We are still to tie down loose ends with our financiers. It will be too early to announce that (amount raised so far). We still want to move on the site before end of year.”
Nyambiri said given there is no local financial institution which can fund the project locally, the company will raise funds through a combination of local equity funding and offshore borrowings.
The company will raise US$35 million from offshore financiers and the balance from local equity funding.
The bus interchange project would stretch from Fourth to Fifth Street and then Robert Mugabe to George Silundika Avenue.
Nyambiri said the occupancy levels in the Central Business District have not changed from the 48%-50% at the end of 2015.
He said there has been a decline in the industrial sector due to the prevailing liquidity crunch as most companies were downsizing their space.
“We haven’t moved significantly down, but we dropped 1%-2% in occupancy levels in the industrial area since our December 2015 position,” he said.
Overall occupancy levels which were at 77,8% in April last year dropped to 73,06% by end of April this year.
At a time when some property holders were subdividing their property to attract tenants, Nyambiri said adopting the practice would affect the value of the property and cause subsequent decline to the company’s income.
“We do take a lot of retail sector where we are renting to small businesses, but we have not yet got to the stage of subdividing the bigger space into smaller units.
“Our position is very clear that the cost of subdividing and actually bringing in the rate of deterioration of the building versus the income that you get, there is no balance that can be achieved on that,” Nyambiri said.
The company’s revenue dipped by 5% to US$2,737 million by end of April 2016 from US$2,88 million recorded during the same period last year.
Profit for the period grew by 12,8% to US$1,2 million from US$1,074 million posted the prior year.
Rental arrears went down slightly from US$2,523 million in April last year to US$2,502 million by end of April 2016.
Nyambiri slammed the unsustainable current business environment obtaining in the country.
“It’s not because rents are not affordable, but it’s because we have a bad economic environment, some businesses no matter if we may say come and operate for free they wouldn’t come because they have other costs to contend with which makes their business unviable. There are some business that even if u reduce rentals they will not survive,” he said.