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Condensed Unaudited Results For Half Year Ended 30 June 2020

Annual inflation peaked at 737% as at 30 June 2020, leading to a significant increase in operating cost of buildings as service providers resorted to indexing charges to the United States of America dollars (“US$”). Cost indexation also adversely affected property developments. A significant number of real estate development projects in the market have been put on hold. Property yields significantly decreased as they are income and value-driven. The Covid-19 pandemic paralysed performance of tourism-related assets, student accommodation and project sales while it negatively affected office space. Retail remained somewhat resilient. The Company’s view is that in the medium to long-term these assets will recover. The commercial real estate sales market has been dormant as investors are not prepared to sell in local currency. Sales on the market, albeit at a slow pace because of liquidity challenges, are mostly of residential properties.


Notwithstanding the challenges, the portfolio performed well with rentals remaining resilient in the face of mounting pressure on rental rates. Rental income was boosted by regular upward reviews and improved turnover rental on retail space. Month-on- month rent collection averaged 100% for the period under review, a decent performance considering the challenging operating environment. The average portfolio vacancy rate marginally worsened to 23% from 22% over the reporting period. Harare CBD office, Bulawayo CBD office and the Gweru industrial facility recorded the highest void rates.

Investment properties were valued at ZWL2.25 billion by independent valuers Knight Frank as at 30 June 2020, a 75% increase from December 2019. In US$ terms, however, the portfolio value declined. The decline is reflective of the discount on portfolio rental income in US$ terms and the deteriorating exchange rate. Despite the regular reviews, the depreciating exchange rate and hyperinflation negatively affected portfolio incomes and hence fair values.


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