Mashhold seeks to cut capital losses
Leading property developer Mashonaland Holdings Limited (Mashhold) will maintain focus on portfolio optimisation and diversification to cut capital losses associated with concentration of office properties in central business districts (CBDs).
This comes as demand for commercial CBD space has remained subdued in the past few years. This has resulted in declining rentals and high void levels worsened by the Covid19 pandemic, which saw usinesses adopting remote working.
Mashonaland Holdings is now looking at further expanding residential segments, where demand has remained high due to the prevailing housing backlog.
Group chairman, Engineer Grace Bema indicated the group would also pay attention to office parks, logistics, warehousing, retail and healthcare segments.
Market watchers have predicted segments like residential and warehousing to continue performing well due to firm demand.
The anticipated growth in agriculture production as well as mining is expected to buoy demand for warehousing facilities while the retail segment is already registering firm demand supported mainly by small to medium enterprises.
Mashhold is already working on various residential projects in Harare’s Bluffhill and Ruwa areas. This is in addition to another project- a healthcare facility in Milton Park, in which the group will develop and lease a hospital at one of its properties.
“The group’s strategy is premised on portfolio diversification to reduce the CBD office concentration while increasing investments in the emerging sectors of the market, which include healthcare, flexible warehousing and logistics, hospitality, retail and office park segments,” she said in an update for the 15 months to December 31, 2021.
During the 15 months under review, the group’s investment property portfolio was valued at $13,9 billion which represented a capital loss of 11 percent compared to valuation performed as at September 30, 2020.
“The capital loss reflects the current portfolio’s CBD concentration. The Harare CBD sector has been negatively impacted by a reduction in space demand due to the worsening urban problems such as deteriorating building infrastructure, street trading, congestion, noise pollution and the attendant high building operating costs among others,” she said.
Total group revenue jumped 80 percent to $561 million on the back of the effect of a longer period and periodic rent reviews coupled with increased occupancy from 79 percent to 81 percent.
Net property income percentage decreased to 79 percent from 83 percent due to increases in property expenses.
Operating profit rose by 62 percent to $300 million from $185 million. But group profit margin fell to 53 percent from 59 percent on administration expenses.
Despite the challenging macro-economic environment, collections percentage improved to 94 percent from 90 percent during the 12 months to September 30, 2020 as a result of sustained credit risk assessments on tenant on-boarding and continuous engagements with sitting tenants.
The group declared a final dividend of 3 cents a share.-The Herald
