Property Value Down to US$132.9M for First Mutual ...

Property Value Down to US$132.9M for First Mutual Properties

Nyashadzashe Ndoro – Chief Reporter

First Mutual Properties Limited has announced a notable decline in the independent valuation of its property portfolio, which now stands at US$132,948,000 as of 31 December 2024, down from US$179,772,504 the previous year.

This decrease, revealed in the company’s audited financial results for the year ended 31 December 2024, is primarily attributed to the adoption of the US dollar as Zimbabwe’s functional currency. The previous year’s valuation was based on converting the local currency value using the official exchange rate at that time.

"An independent property valuation conducted by Knight Frank Zimbabwe valued the property portfolio at US$132,948,000 (FY2023: US$179,772,504) as of 31 December 2024. The decline in value was due to the adoption of the US dollar as the functional currency. The prior year’s investment property value was determined by converting the December 2023 local currency value using the official closing interbank rate of ZWL 5,935.4572 to the US dollar," the company noted.

Despite this significant valuation adjustment, First Mutual Properties reported a 62% increase in net property income to US$4,842,676 (FY2023: US$2,984,485) and a 31% rise in revenue to US$9,027,117 (FY2023: US$6,896,240). This revenue growth was driven by increased income from property services, a rise in US dollar-denominated rentals, and timely rental reviews.

In his Chairman’s Statement, Elisha K. Moyo highlighted the complex economic environment in 2024, marked by global inflationary pressures, high interest rates, and domestic currency volatility following the introduction of the Zimbabwe Gold. These factors affected the property sector, with US dollar-based rentals becoming less competitive due to exchange rate fluctuations and a significant premium on the parallel market.

Additional challenges included a drop in rental collection rates from 85% in 2023 to 75% in 2024, largely due to tenants’ financial difficulties. Management reported active engagement with tenants to resolve arrears and an increased focus on tenant and portfolio diversification. The company invested US$945,231 in infrastructure maintenance to maintain property quality.

On the development front, FMP made progress on key projects. The Arundel Office Park extension, valued at US$5.1 million, has been completed, adding significant lettable space. A mixed-use development in Zvishavane is also advancing, with the first phase of duplex flats nearing completion and apartment blocks ready for commissioning.

The Board of Directors opted not to declare a dividend for the fourth quarter of 2024, choosing instead to allocate available cash toward the company’s expansion initiatives.

Looking ahead, Moyo acknowledged the persistent economic uncertainties and affirmed management’s commitment to adapting strategies to safeguard shareholder value. He emphasized prudent capital management and maintaining the quality of the property portfolio. First Mutual Properties also reiterated its commitment to integrating sustainability into its operations.

The company owns a diverse portfolio of 41 built properties across Zimbabwe’s major cities and towns. These include office parks, retail spaces, commercial buildings, industrial warehouses, and suburban shops.