Mashonaland Holdings achieved a plausible set of results for the first six months to March 2021, despite operating in a market it said was “subdued”.
In a statement accompanying the company’s results, Mashonaland Holdings (Mash) chairperson Grace Bema, said the property market was characterised by limited commercial freehold transactions “as the investment climate remains hazy”.
Bema added that the few property transactions and developments were mainly concentrated in the residential sector.
“The development sub-market remains constrained by viability challenges as effective demand remains low against high costs of construction,” Bema explained.
The property sector was also hit by the Covid-19 induced lockdown period which affected rental growth as the market could not timely review rentals due to the negative effects of the lockdowns on tenants’ rent paying capacity.
Bema said failure to review rentals, which were now below optimum levels resulted in a decrease in the portfolio value.
The Company performed an internal open market valuation of its investment property and recorded a 2 percent reduction from the September 2020 position.
Bema, however, believes the low rentals “presents an opportunity for the company to further align its rentals as the country’s economic forecasts continue to improve.”
Meanwhile, despite the challenging operating environment, Mash still reported a satisfactory set of results.
Revenue for the six months increased by 46 percent to $149,4 million.
Bema said the revenue growth is mainly attributed to periodic rent reviews to hedge against the effects of inflation.
Revenue for the property concern also benefited from increased occupancy levels to 79.7 percent from 77.4 percent.
This is at a time operating expenses to revenue were also decreasing marginally to 46 percent from 47 percent.
As a result, operating profit increased by 29 percent to $83 million.
Collections for the 6 months also remained resilient at 94 percent up from 91 percent in 2020.
“The collaborative business relationships with tenants and a robust on-boarding process continue to sustain collections,” according to Bema.
Turning to property development projects, Bema said the company experienced delays in commencement of planned development projects due to Covid-19 induced lockdowns.
Post lockdown, the company however commenced with the construction phase of the 25-unit Bluff Hill housing project.
“The construction of a model show house has since been completed and pre-selling has begun to manage the market risk.
In other developments, Charter House reconfiguration works to a boutique hotel are now expected to commence in the second half of 2021.
In the meantime, the property concern has commenced disposal for its 24 fully serviced residential stands in Windsor Park.
According to Bema, disposal of the stands and other non-core assets will provide liquidity to enable the Company to embark on its strategic developments.
Going forward, the Company remains optimistic to exploit the “pockets of growth emerging in the market as the economy weathers the Covid-19 storm”.