• First Mutual Properties is considering delisting from the ZSE due to a persistent 62% discount to its $136m property portfolio value, citing market pricing inefficiencies
• Revenue declined 0.7% to $8.97m, with rising costs and 20% uncollected rent, amidst a structurally impaired CBD office market (40-60% vacancy)
• Suburban offices ($41.7m, 4% vacancy) drive value, while CBD offices ($24.2m, 40-60% vacancy) face headwinds, impacting portfolio valuation

Harare- Zimbabwe's largest listed property company is considering walking away from its own stock exchange, largely due to undervaluation by the Zimbabwe Stock Exchange, and the 2025 financials explain precisely why.

On 26 February 2026, First Mutual Properties issued a cautionary statement to shareholders advising that it was "engaged in negotiations and/or evaluating a potential transaction to delist from the Zimbabwe Stock Exchange." The 2025 results, released weeks later, provide the explanation the cautionary announcement withheld.

The company's market capitalisation on the ZSE stood at approximately ZWG1.24 billion as of late March 2026, equivalent to roughly $47 million at the prevailing exchange rate. Its independently valued investment property portfolio, assessed by Knight Frank Zimbabwe as at 31 December 2025, stood at $136 million, while its total net asset value,  the equity belonging to shareholders stood at $119.4 million.

Hence, the market is pricing the company at a 62% discount to its net asset value, and at 34 cents on the dollar relative to its physical asset base.

That discount is not a temporary market dislocation. FMP's market capitalisation has tracked well below asset value for years: $59.1 million in 2023 when it posted a $93 million profit, retreating to $39.4 million in 2024 during a fair-value-driven loss year, and recovering only modestly to $45.7 million in 2025.  The discount has persisted regardless of whether the company was profitable or loss-making, growing or contracting. It is structural, not cyclical, and it is the market telling the company that the ZSE cannot price it fairly.

The implication is explicit, if a company's shares trade at 38 cents in the dollar relative to its net assets, and that gap has persisted for three years, then being listed costs more in compliance, governance, and management distraction than the capital market access it provides. 

For a property company generating $9 million in annual rental income from a $136 million portfolio, the mismatch between value and price is not abstract. It affects the cost of raising equity capital, the ability to use shares as acquisition currency, and ultimately the group's capacity to grow. The delisting discussion is not a retreat. It is a rational response to a market that has, for three consecutive years, refused to close the gap.

Meanwhile, it terms of performance, revenue fell from $9.03 million to $8.97 million, a marginal decline that masks more significant internal shifts. Rental income grew 6% to $8.71 million, which is the genuinely good news in these results, higher USD-denominated leases and fuller occupancy in the suburban office and industrial segments are generating better headline income. But property services income collapsed from $793,000 to $263,000, a 67% decline that reflects either the loss of management mandates or the transition of the Arundel Block 13 development out of the construction phase into the completed portfolio.

Net property income fell from $4.84 million to $4.57 million despite the revenue growth. Property expenses rose from $3.45 million to $3.84 million, an 11% increase in the cost of running the portfolio against a 0.7% decline in revenue. The single largest cost driver was employee expenses within property operations, which surged from $1.29 million to $1.68 million, a 30% increase. That was not inflationary drif, but the payroll of a business that has added headcount or increased remuneration faster than its revenue base can support.

The net property income margin,  NPI as a percentage of revenue, fell from 53.6% to 50.9%. For a property business, that margin is the equivalent of the gross margin in a manufacturing company. A 2.7 percentage point deterioration tells you the portfolio is becoming more expensive to operate per dollar of income it generates.

The rent collection rate of 80% is presented as "resilient." In absolute terms, it means $1.79 million in revenue billed during 2025 was not collected. The provision for credit losses of $399,000 and bad debts written off of $165,000 total $564,000, a fraction of the uncollected balance. The allowance for credit losses at year-end stood at $1.47 million against gross trade receivables of $2.49 million, implying a 59% coverage ratio on aged receivables.

The credit loss model was revised during 2025 to apply a 100% loss allowance to all tenant arrears aged 90 days and beyond, a significantly more conservative approach than the prior year matrix. This is the right accounting decision, and it should be commended. But it also reveals what the prior year provisioning was concealing, a tenant arrears book that is more impaired than previously disclosed, now subject to full write-off treatment once it ages beyond three months.

The tenant receivables gross balance of $2.49 million represented 27.8% of annual revenue, nearly three months of billings sitting uncollected. For context, a well-managed commercial property portfolio would typically target a receivables-to-revenue ratio of 8-12%, reflecting standard 30-day payment terms. First Mutual Properties is running at more than double that threshold, and has just changed its provisioning rules to admit that much of what sits beyond 90 days is, in practice, unrecoverable.

The completion of Arundel Office Park Block 13 and its successful lease to a blue-chip tenant was the most unambiguous positive in the 2025 results. The new building was leased, income-generating, and equipped with a 75kW solar system netted to the grid, the kind of asset that earns premium rents in a market where reliable power is a competitive advantage. The development pipeline at Golden Stairs represents further optionality.

But the financing of that expansion has left a cost legacy. Total borrowings stood at $1.03 million externally and $665,000 from related party bridging finance, totalling approximately $1.7 million. Finance costs rose from $21,000 to $507,000 in the year, a twenty-four-fold increase, as previously capitalised interest on the Block 13 development was expensed now that the building is complete. At a 12% interest rate on external debt and 15% on the related party facility, the annual debt service burden is not enormous in absolute terms, but it is rising in a business where NPI is falling.

The deferred tax liability of $17.1 million, representing 14.3% of total assets, is the largest liability on the balance sheet and reflects the accumulated taxable temporary difference on investment property revaluation. When, and if, the portfolio is sold, that liability crystallises in cash. In the context of a potential delisting and possible internalisation of the portfolio by First Mutual Holdings, the deferred tax position is a non-trivial transaction consideration.

Meanwhile, a privatised FMP would sit alongside the FMHL group's insurance operations, property management business, and microfinance arm. The group's chairman has already identified investment property revaluation as the central swing variable in consolidated group earnings,  swinging from a $50.5 million loss to a $3.9 million gain in a single year. Owning the property company outright, without the discipline of public reporting and minority shareholder scrutiny, concentrates that volatility entirely within the parent's control.

For First Mutual Holdings' own minority shareholders, the absorption of FMP would mean the property portfolio's fair value swings , and its management , are no longer subject to independent board oversight, separate auditor disclosure, or the quarterly reporting cadence that listed status imposes. The gain in strategic flexibility comes with a loss of transparency that the FMHL investor base should price accordingly.

The 2025 results are, in the end, the last full public window into this business before a potential departure from public markets. They show a portfolio of genuine quality , suburban offices, industrial assets, and retail properties generating steady dollar income , surrounded by a set of structural pressures: a CBD office market in secular decline, a 20% uncollected rent rate, rising operating costs, and a deferred tax overhang. The market has discounted that reality for three years. The question now is whether the controlling shareholder prices it at all.

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