Zimre Property Investment (ZPI) performance in the year to date saw pure retail rental and industrial rental gain in overall contribution to rental income as Central Business District (CBD) rental income declines as firms continue to move offices from the CBD to office parks.
ZPI chief executive officer Edson Muvingi told shareholders during the company’s virtual annual general meeting held today that CBD occupancy level was 88 percent in June 2020 with rental income of ZWL$4.75 million which represents 31 percent of total rental income.
“Pure retail rental occupancy level stood at 100 percent in the half year to June 2020. This is a result of the ability of the sector to weather out inflationary pressures as they can shift costs to consumers. Pure retail had rental income of ZWL$9 million in the half year contributing 59 percent of total rental income,” he said.
Industrial rental revenue totaled ZWL$570 000 in the half year with student accommodation raking in ZWL$28 million as they contributed 4 percent and 2 percent respectively to total rental revenue. Student accommodation has become handy to the company as students now pay between US$80-100 per bed.
Total occupancy rate for the company’s properties in the year to June 2020 stands at 87 percent as total rental income came in at ZWL$11.5 million. Rental income exceeded the budgeted target of ZWL$8.4 million by 37 percent as the quarter on quarter rental reviews proved to be a good strategy. However stand sales missed the target by 98 percent as they came in at $0.4m against a budgeted target of ZWL$17.9m although the true value will be seen from fair value exchange gains.
Revenue for the post year end period was ZWL$12.5 million which is 778 percent higher than the amount realised the same period last year but missed the budgeted target of ZWL$28.3 million by 56 percent. Total Income for the half year was ZWL$14.5 million a 247 percent increase from last year’s figure but due to COVID-19 the figure is 49 percent below target.
Average rental collection in the six months to June was 93 percent with a void rate of 23 percent which is 1 percent higher than 2019 but 5 percent lower than 2018’s 28 percent and equal to 2016’s void rate. The property giant said that plans to build Selbourne Student Hub are still in process as the company wants to fund the project through REITs or Property Funds. The company announced during its annual general meeting held virtually.
ZPI said it will consult with relevant financial authorities on how they can go on with such kind of funding, so that they get proper guidance on the issue. The 954 bed student hub is expected to cost around US$9.8 million and will take around 18 months to complete. Preliminary works on the project to begin in Q4 2020 according to the company.
The company said it has learnt a lot through its Nicoz House Student facility in Bulawayo that students prefer making their own meals rather than buy takeaways and thus the Selbourne hub will be sort of a home at school with stand-alone apartments.
The stand-alone apartments will also help the company in times when student accommodation will become obsolete as the hub already represents a home and leasing is not hard. Other projects in the pipeline include the Zimre Lodges in Victoria Falls which is waiting council approval and granting of permits to go ahead. The Sawanga mall in Victoria Falls has an occupancy rate of 93 percent with basic net rent of ZWL$1 million excluding turnover.
ZPI said they still await the opening of Chicken Hut and Nandos at the mall as they have reassured the company, saying that equipment hold up in South Africa is the biggest challenge the two tenants are facing due to Covid-19 lockdowns. The two fast foods retailers said they expect to open doors for the public next month making the Mall even livelier.
The shareholders approved a total dividend of ZWL$0.14 per share totaling ZWL$2.4 million. At the same meeting directors fee of ZWL$195 184 was approved by shareholders.