ZPI operating profit declines

Busines Reporter
Zimre Property Investments’ operating profit for the five months to May 2017 nearly halved to $468 000 compared to $819 000 achieved during the same period last year.Managing director Mr Edson Muvingi attributed the decline to rental reductions and an increase in voids; a trend that began in 2013.

ZPI’s average void rate per annum has increased to 26 percent in 2017 from 12 percent in 2013 as tenants either seek cheaper options or wind up their operations.

Office space has been the most affected while retail space has remained subdued but stable. The firm seeks to leverage on quality service provided in the residential side where it has a couple of projects for the market.

Rentals for the period under review came off 15 percent to $1,169 million due to downward reviews and vacations. Mr Muvingi said the challenging operating environment had a negative effect on their business as tenants sought cheaper options, while others eventually vacated the premises.

“The environment has been characterised by liquidity challenges, declining rental revenue, fair value losses, voids, deteriorating service provision and subdued demand for real estate products,” said Mr Muvingi at the company’s annual general meeting yesterday.

“Negotiations also take long as capacity to pay has reduced,” he said. Stand sales fell 10 to $748 000 from $828 000 achieved in the same period last year.

Total income came in 12 percent lower at $2,119 million from $2,403 million. ZPI however managed to contain its administration costs while other personnel costs went down in the period under review.

Mr Muvingi said the firm would however continue to leverage on a number projects it has lined up, both residential and commercial property developments.

These include the Ruwa Zimre Park Extension, Marwede residential development in Harare, a retail mall in Victoria Falls and student accommodation in Bulawayo.

The portfolio diversification seen as good hedge in a challenging operating environment. Meanwhile, ZPI is still to dispose of its high central business district buildings in Harare, Masvingo and Mutare.

ZPI has received several offers from the market, but Mr Muvingi indicated they were not lucrative enough.