Real estate concern, First Mutual Properties (FMP), recorded a loss of US$57,28 million in the financial year ended December 31, 2024, due to a fair value adjustment loss of US$52,57 million on its investment properties.
FMP’s last year was from a profit after tax of US$93,32 million recorded in the year ended December 31, 2023.
Last year, FMP had an independent valuation of its property by realtor Knight Frank Zimbabwe, which reduced the company’s investment portfolio by 26,04%.
Consequently, this led to a loss on its fair value adjustment on investment properties.
“An independent property valuation conducted by Knight Frank Zimbabwe valued the property portfolio at US$132 948 000 (FY 2023: US$179 772 504) as of 31 December 2024,” FMP chairperson Elisha Moyo said in a statement accompanying the firm’s annual financial results for 2024.
“The decline in value was due to the adoption of the US dollar as a functional currency. The prior year’s investment property value was determined by converting the December 2023 local currency value using the official closing interbank rate of US$: ZWL5 935,4572.”
FMP’s total assets were down to US$136,95 million during the period under review, from a prior year comparative of US$185,91 million.
This lowered the firm’s liquidity to fund short-term operations, as FMP had US$0,77 to every dollar of short-term debt.
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“The group is strategically advancing shareholder value through various projects at different execution stages. The flagship development, the Arundel Office Park extension, features a double-storey building with a basement, providing 2 616,5 square metres of total lettable space,” Moyo said.
“This project has been completed and is valued at US$5,1 million. In Zvishavane, First Mutual Properties is a co-investor and project manager of the development of mixed-use duplex cluster houses, three to four-storey apartments and student accommodation.”
He said the project’s first phase comprises six duplex flats, which are 90% complete, and 20 blocks of double and triple-storey flats, which are ready for commissioning.
“Construction of the student accommodation is progressing well,” Moyo said.
Total revenue was up 31% to US$9,02 million during the period under review from a prior year comparative of US$6,89 million.
“Rental income remains the main source of revenue. Revenue growth was driven by growth in property services income, predominantly project management fees, an upsurge in pure US dollar rentals and timely rental reviews,” Moyo said.
“Due to tenants’ financial challenges, rental collection rates fell from 85% in 2023 to 75% in 2024. Management is working closely with tenants to resolve the arrears.”
The firm bemoaned exchange rate volatility and an unsustainable parallel market premium, as this adversely affected formal sector activities, including retail.
“In-store US dollar pricing became uncompetitive, which constrained performance-based rentals as activity shifted to the informal sector,” Moyo said.
“Contractionary fiscal and monetary policies adopted by the authorities also negatively affected liquidity during the year.”
He said these challenges created an uncertain business environment.
“Management will continue to adapt its strategies to protect shareholder value and sustain business operations,” Moyo said.
“Prudent capital management, stakeholder engagement, effective utilisation of the available lettable space (occupancy levels), quality and ambience of our property portfolio will be prioritised.”
