New lettings, rentals in retail properties and recent acquisitions increased FMP rental income


    Harare – First Mutual Properties said rental income for the six months ended June 30 2018 increased by 7 percent to close at $3.949 million compared to $3.704 achieved last year on the back of new lettings in high value space, increased turnover based rentals in retail properties and new rental income from recent acquisitions.

    In a statement accompanying the Group’s financial results, Group Chairman Elisha Moyo said during the period under review occupancy level improved to 74.44 percent up from 73.54 percent at June 30 2017 and an increase from the 2017-year end position of 70.94 percent, testimony to significant leasing efforts during the period.

    He said the rental yield expanded to 6.76 percent compared to 6.76 percent last year, while the average rental per square metre for the portfolio was $7.11 compared to $6.94.

    Moyo said improved income return for the property portfolio was driven by net operating income.

    “The income return for the property portfolio at 4.35 percent improved from 3.59 percent last year, driven by improved net operating income resulting from rising rental income. This solid performance translated to a 9 percent increase in operating profitability, showing the benefits of creating and maintaining a diversified property portfolio and active asset management strategies to sustain performance in the challenging operating environment.”

    Moyo added that following an independent property valuation by Knight Frank Zimbabwe, the property portfolio appreciated to $145 million from $137 million prior year.

    “The growth was mainly attributable for fair value gains on the back of an increased occupancy levels and recent acquisitions.

    “On a like for like basis, excluding property acquisitions concluded during the period amounting to $2.025 million, the fair value of the property portfolio grew by 5 percent compared to December 31 2017. The business will therefore continue to allocate capital to undertake refurbishments and maintenance programmes in order to preserve existing assets and improve earning potential of the portfolio.”

    Going forward the Group said, in the short term, continued pressure in occupancy levels is expected.

    “Developments going forward are very much dependent on post-election issues such as international engagement, stability, peace and national focus on development. These will determine the trajectory of the economy and consequently the property sector performance.

    “The market is expected to remain an occupiers market in the short term due to excessive supply of space, and the lack of quality assets to absorb either expanding business or new entrants.”

    Additionally, the Group said it saw it prudent not to declare an interim dividend for the period citing that it is embarking on property portfolio growth initiatives to improve earnings.

    “Apart from pursuing leverage balance sheet growth, the Group also plans to capacitate its equity contribution in new developments and acquisitions. While the Group remains committed to ensuring regular dividend distributions to shareholders, planned initiatives in the short term require equity funding,” it said adding that the position will however be assessed at year-end.

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