eBusiness Weekly
Fradreck Gorwe
Real estate investment concern listed on the Zimbabwe Stock Exchange, Zimre Property Investments (ZPI) banks future profitability on portfolio restructuring on the backdrop of a pitiable financial performance for the year ended December 31, 2018.
For ZPI, portfolio restructuring is considered the way to go given positive returns accrued from the disposal of Zimre Centre in Harare to finance construction of the Sawanga Shopping Mall in Victoria Falls and the conversion of Nicoz House building in Bulawayo to student accommodation.
Zimre Centre disposal materialised as the Sawanga Shopping Mall has neared completion with letting space almost fully booked with a balanced mix of retail businesses.
On the other hand, the $1,8 million conversion and refurbishment of Nicoz House building into a student accommodation facility, has been completed with student occupants expected to fill the facility by the second quarter of 2019 as indicated by Board Chairman Jean Maguranyanga in a statement accompanying the financial results.
The two projects are expected to start earning revenue by the end of the first quarter of 2019.
Restructuring is mulled as a rational reactive decision informed by a host of hurdles that pulled down 2018 revenue by 24 percent to $4,03 million from a $5,27 million high in the prior year comparative.
Among the hurdles were liquidity challenges and foreign currency shortages coupled with an increase in inflation from 2,9 percent in February 2018 to a worrisome 42,09 percent by the year end.
Among other impediments to sound financial performance was the rising number of voids emanating from weak demand, voluntary surrenders of leased space and evictions for non-payment.
Resultantly, voids ended 2018 at 33 percent from a 26 percent low in 2017.
Adding to the gloomy list were heavy construction expenditures and the reduction of occupied space by tenants as they sought to manage business costs;
“Tenants continued to reduce occupied space in order to manage business costs. Some tenants scaled down operations while others closed due to the difficult economic environment. There was also rapid erosion of rental revenues due to inflation and the contractual nature of leases which made it difficult to immediately adjust rentals.
“Construction projects witnessed significant cost increases as suppliers of building materials and contractors adjusted prices. Most suppliers insisted on being paid in foreign currency for all imported building materials,” harangued Maguranyanga.
Portfolio restructuring is projected to reverse losses and enhance profits. Year 2018 saw a loss of $1,42 million compared to a profit of $2,49 million in 2017.
In as much as the property investment concern confines hopes on restructuring, the stands business is expected to contribute immensely as the company has significant stand stocks according to the chairman. Some such stands are at Zimre Park Extension in Ruwa.
