First Mutual Properties (FMP) reported a slight decline in occupancy for the five months to May 31 but indicated that the situation will improve going into the third quarter of this year once some of the life projects come on board.
Going into the new year, the FMP broke ground on three projects.
One of them is the Arundel Office Park, which has a huge land bank.
Managing director Chris Manyowa told shareholders at the company’s annual general meeting that the project is one of its prime assets within the portfolio, constituting almost 30% by value and almost the same percentage by lettable area.
“We are on the ground at Arundel Office Park, where we are putting an additional block that is almost similar to the other blocks in terms of design and what we are just showing you is that it will just look contemporary, just moving with the trends; it is part of the expansion plan,” he said.
This is an FMP project that has been fully funded.
Finance executive Dumisani Tshabalala expects the company’s occupancy levels to stabilise.
“In terms of occupancy, there is a slight dip of 86.2% from 89.6% due to restructuring at Arundel Office Park, which will then stabilise as we move into Q3 of this year.
Tshabalala said there have been some notable movements in revenue.
This comes as the company’s topline increased 737.98% to $3 billion from $358 million thanks to rental reviews that have tracked the movement in interbank rates.
As of December 31, 2022, we were achieving 65% to 70% in US dollars and the remainder in Zimbabwe dollars, which is also the driver of the increase in rental yield due to the currency in US dollars.
In terms of property expenses, there has been significant growth of $1.3 billion from $74 million.
“This is largely due to speculative prices in the market with a lot of fast-moving consumables required for property related expenses,” he said.
“Allowances for credit losses have also grown with a growth in our revenue lines, so there is a greater provisioning model that has been happening, which results in a net property income of $1.3 billion versus a prior year of $308 million.”
As for administration expenses, there was a growth of $481 million from $158 million in the prior year.
Other income was $649 million, up from $45 million, largely driven by tenant remitted interest, resulting in an operating profit of $1.4 billion versus a prior year of $196 million.
“You will note in terms of key performance indicators that there has been a movement in the historical rental yield from 4% to 7%; this is driven by a more robust review of rentals to align and track so that the rental yield is at the correct level,” he said.
“The increase in the rental average per square meter has also been driven by growth in revenue. There is a slight dip in the collection rate due to speculation in the market, but we continue to push to keep it at the right level.” – Harare