ZPI expects a dip in income

ZIMRE Property Investment (ZPI) says it expects a significant drop in income in the short term but hopes to recover at the end of March next year after restructuring its investment portfolio.
The group disposed Zimre Centre in Harare to finance the construction of the Sawanga Shopping Mall in Victoria Falls and also converted Nicoz House building in Bulawayo from an office building to student accommodation.
“The two buildings together contributed more than a third of rental income. A significant dip in the business income was therefore unavoidable in the short-term. Full recovery by the end of the first quarter of 2019 is expected as the project remains on schedule and tenant interest is reasonable,” ZPI chairperson, Jean Maguranyanga, said.
In order to manage risk precipitated by market uncertainty and preserve value to the business, Maguranyanga said the board took a deliberate decision to slow down project sales.
A significant reduction in project sales was therefore anticipated.
“Once the market volatility normalises, accelerated disposal of stands will be embarked on to release cash from projects,” she said.
ZPI’s rental income on budget at $1,1 million declined by 25 percent compared to the same period last year, in line with the strategic shift.
Average collections for the period to June 30, 2018 were 97 percent compared 107 percent on prior year whilst debtors marginally declined by 11 percent over the same period.
This was largely due to conclusions of eviction processes initiated earlier on in the year and voluntary surrenders of space.
Maguranyanga said the construction of the Victoria Falls Sawanga Shopping Mall was on schedule.
The $13 million shopping mall provides 5 000 square metres of lettable space, anchored by a major retail chain. The project comprises 23 shops of various sizes and will house banks, concept stores, food courts, restaurants, coffee shops, jewellery and curios shops as well as a fuel service station.
“Letting of the shop is in progress and currently the expressions of interest received exceed the space available. The major tenants are expected to start trading in December 2018, ahead of the scheduled project completion date,” Maguranyanga said.
Maguranyanga said they expected demand for office and industrial space to remain subdued in the short-term.
“In the medium term, we envisage increased demand for real estate products in general in line with the anticipated economic turnaround. The retail sector is likely to outperform the other property sectors for now,” she said.
ZPI suffered a loss of $197 397 for the half year to June 30, 2018 from a profit of $613 526 due to value preservation strategies that were deployed, which reduced r