Listed property developer Zimbabwe Property Investments Limited has earmarked $2 million to purchase land to drive growth in property development. This comes as ZPI's financial results for the full year to December 2013 show that residential projects execution has been the pivot of the group's competitive advantage after helping the group register modest revenue growth.
ZPI secured a $1,83 million 90-day renewable bankers acceptance loan from ZB Bank, whose next maturity is this month. The loan was extended at 20 percent interest per annum. "The loan was obtained to fund the purchase of commercial land in Harare. A $2 million facility was established for that purpose against which a single draw-down of $1,3 million was made," ZPI said in its financial statement.
The loan is secured by first mortgage bonds over three ZPI owned properties namely Old Shell House, Nicoz House and Whetherby House which are all situated in Harare. Profit after tax for the 2013 full year came in at $1,8 million, significantly lower than the $7 million in the same period last year.
Profit was higher last year because of a $5 million fair value adjustment in investment property after little change in operating profit. Earnings per share fell to 0,11c from 0,38 in 2012. The ZPI Board has recommended a final dividend of $0,024 (2012: $0,023) per share payable on or about May 7, 2014.
Total revenue for the year to December 2013 increased to $6,67 million compared to $5,2 million in the prior year, a 28 percent growth.
"Clearly, projects execution has to-date been your company's distinct competitive advantage in line with the strategic thrust adopted after the introduction of the multi-currency system," said ZPI chairman Mr Buzwani D. Mothobi.
This was despite an environment that saw economic contraction and significant scaling down of operations by many entities.
Liquidity constraints affected rental revenue growth and collection, resulting in the continued rise in rental arrears and voids.
Associated with the failure to pay for occupied space was a significant increase in portfolio voids due to tenant business failures. The group said void rate rose from 10,92 percent in December 2012 to 14 percent in December 2013.
Rental income contributed 56 percent to total income while projects income for the year amounted to $2,76 million, up from $1,31 million in 2012, reflecting a 110 percent growth.
Rental income was $3,87 million from $3,81 million in 2012, a 2 percent growth. ZPI said rent reviews were limited with emphasis on collection that yielded a 2013 average collection rate of 92 percent against 93 percent in 2012.
Total administration costs went up by 11 percent during the year under review compared to the same period last year.
Other operating expenses, which include the cost of stands sold, went up by 113 percent as more stands were sold in 2013 compared to the previous year. As a result, your company recorded an operating profit of $1,96 million.
Residential stands in the Zimre Park Masvingo project continue to sell though at a slower pace, suggesting lack of mortgage facilities with most of the purchases being cash
To date, 172 of the 388 stands have been sold with revenue of US$3,8 million having been generated.
Based on the land area, 46 percent of the project has been sold and 61 percent of the capital cost recovered from the achieved sales.
The Tynwald residential development project, approximately $3,7 million at current prices, continues to perform well. By year-end, 59 percent of the project had been sold with 72 percent of the project costs already recovered.