Harare-Property concern ZPI said it bore the brunt of portfolio reconfiguration through a short term loss in revenue which impacted negatively on overall performance for the 5 months period to May 2018.

Revenue for the period was 28% below last year and a conservative 4% below budget. In the 5 months period revenue earned amounted to $844 million which compared to $1168 million earned in the same period last year.

The variance to prior year was a result of a shift in portfolio which resulted in some short-term payoffs. The company undertook a deliberate strategy to diversify its property portfolio which has historically been biased towards CBD offices.

As at 2016, 83% of the company’s property portfolio was in CBD office and at the end of 2017 the exposure had been reduced to 70%.

While the  broader property market has been under strain for a couple of years to date, much of the impact was on CBD office segment which noted sharp declines in occupancy levels and  a surge in voids, as tenants sought value in surbuban properties while some completely closed shop as the economic crisis bite.

In 2017 ZPI undertook to dispose of its prime office property in CBD Harare, the ZIMRE centre which houses ZIMRE holdings and several government departments. The property, which prior to, contributed 33% to ZPI revenue, was disposed to Zim government for a $10.8 million consideration.

On disposal this effectively resulted in a loss in income which impacted on the 5 months performance and likewise a loss in CBD office weight on the overall portfolio.

Instead ZPI increased its exposure in CBD retail by 183% to $4.8 million while increasing its land bank holdings  by 12% to $4.9 million.

The industrial property portfolio was trimmed by 8% to $0.98 million as voids for the sector worsened from 47% to 63% between 2016 and 2017.

CBD retail which is a key focus area going forward enjoyed the lowest voids rate within the portfolio at 6%. CBD office voids stood at 31% from 25% in 2016.

To further rebalance the portfolio ZPI is working on a couple of exciting projects chief being the Sawanga mall in Vic Falls, which falls under CBD retail.

The mall covers 5000 square metres of retail space and is being constructed at an estimated cost of $13.5 million. $6 million has already been sunk on the project and the amount is internally generated and mainly from Zimre Centre disposal.

In the same vein of rebalancing and diversifying, ZPI hopes to takes advantage of the buzz in residential property which stems from a sharp housing backlog in Zimbabwe through the reconstruction of Nicoz House Bulawayo into a student accommodation facility for NUST students, occupying 200 beds.

The work is being done at a budget of $1,7 million and an expected yield of between 11-13%, an above market average return. The facility is now complete and occupation is expected later this fall.