Mashonaland Holdings is funding new lift installations projects at ZB Life Towers and ZB Centre
MASHONALAND Holdings’ revenue in the four months to January was 4 percent lower than last year’s at US$2,5 million but this was, however, 9 percent ahead of the budgeted US$2,3 million as the group had not anticipated new lettings.
Chief executive Mr Manfred Mahari told the annual general meeting yesterday that the environment continues to be subdued with liquidity situation expected to worsen.
“The rental market has stagnated and may remain subdued for the rest of the year.”
The group reported an operating profit of US$1,2 million, which was 28 percent below the comparable period last year but 7 percent above current budget. The margin dropped to 48 percent against a budget of 50 percent.
Mr Mahari said the profit margin was now at par with industry average but is expected to improve to 54 percent by year end.
Occupancy was at 80 percent above the industry average while the forward yield was unchanged at 8 percent. Arrears were at 16 percent.
Voids were 16 771 square metres representing 16 percent of the lettable portfolio compared to the budgeted 15 percent. The bulk of the voids were office at 12 percent.
Mr Mahari said rental debtors had grown to US$1,4 million from the September year end position of US$1 million.
“As such the resulting arrears at 16 percent are consistent with this period after the annual shutdown.”
Mr Mahari added that in spite of the weakening economic fundamentals, management continues to actively ensure that arrears remain under control.
Property expenses rose 13 percent to US$302 009 and were just in line with the budget of US$301 097. Voids related costs constituted 40 percent of the spend and continued to be the key cost drivers of this line.
Property expenses to income ratio was 12 percent and in line with the budget. Mr Mahari said provision for bad debts was at 14 percent of the total at US$22 865.
Admin expenses rose 51 percent to US$1 million, driven mainly by the performance of a long term incentive scheme and payments for the short term incentive scheme which were made during that period. The admin expenses to income ratio was 40 percent against a 38 percent budget. In terms of projects, Mr Mahari said the group will spend over US$15 million on property development projects which are currently at different stages.
The US$5, 1 million Natal project in Avondale is progressing well and on target for beneficial occupation earmarked for the end of August.
“To date we have spent $2,7 million. The commercial building is actually a banking hall which will cater for the greater Avondale area,” he said.
He said the major view was that the area is occupied mainly by non-governmental organisations which are not supported by banking activities.
Mr Mahari said the Westgate and Hazeldene residential projects had a combined cost of US$10 million. Construction on the two sites will commence within the financial year.
“These are residential projects and they are at different stages of municipal approvals,” said Mr Mahari.
He said US$4 million will be spent on Westgate housing development while US$6 million will be spent on Hazeldene which is a residential cluster development in Borrowdale.
“This takes the total investment to over US$15 million inclusive of the Avondale project,” he said.
On property maintenance, Mr Mahari said new lift installations projects at ZB Life Towers and ZB Centre have neared completion.
He said the company’s preventative maintenance remains in place to ensure preservation of market value. – FinX.