First Mutual leans on profitable properties

REALTOR First Mutual Properties (FMP) says it will continue to invest in profitable properties amid heightened inflation and exchange rate risks. In the financial year ended December 31, 2023, the Zimdollar depreciated by over 700%, negatively impacting the market.

The depreciation was as a result of money supply increasing amid very little economic growth.

This depreciation has continued into the current year, with the local currency having depreciated by 261% to US$1:ZWL$22 055,47, year to date.

In its latest financial results, FMP chairperson Elisha Moyo said the firm aimed to protect its assets.

“The environment remains uncertain due to the potential knock-on effects of global shocks, likely drought and currency instability. Management remains alive to these exogenous factors and will, therefore, continue to adapt its response plans to enhance shareholder value,” he said.

“The group will continue to invest in profitable properties to hedge against inflation and exchange rate risks. Further, management will prioritise the maintenance of high occupancy levels by effectively managing client relations and providing quality and secure products. This will be achieved through ongoing property refurbishment, maintenance and upgrades.”

FMP, a subsidiary of First Mutual Holdings Limited, revealed that an independent property valuation conducted by realtor, Knight Frank Zimbabwe, as at December 31, 2023, valued its property portfolio at ZWL$1,06 trillion.

This was up from ZWL$109,37 billion in the prior year.

A fair value adjustment of its investment properties, owing to the local currency volatility, led to a profit after tax of ZWL$553,93 billion in the period under review, a 265% increase from the 2022 comparative period.

“The growth in rentals was in line with the inflationary environment which has been responsible for the growth in property values of 876%,” Moyo said.

Properties under construction include FMP’s flagship, the Arundel Office Park extension.

Moyo said the scope of that project involved building a doublestorey office block with a basement, providing a lettable area of 2 616,5 square metres.

“Significant progress has been made on the project and it is nearing completion with glazing, wall and floor tiling, solar installation, lift installation and internal finishes now remaining. The group is a coinvestor and project manager in constructing a 388-bed student accommodation building near the Chinhoyi University of Technology,” he said.

“The project is progressing well, with completion expected in H1 2024. In Zvishavane, the group is also a co-investor and project manager in the development of mixed-use duplex clusters, three to four-storey apartments, and student hostels, with the proposed designs having been approved by Zvishavane Town Council.”

The project is in three phases. “Phase A, comprising six duplex flats and 20 blocks of double and triple-storey flats, is already underway and completion is targeted for September 30, 2024,” Moyo added.

However, a major threat to FMP’s investment plans is the fact that the company only had ZWL$0,68 to every dollar of short-term debt, leaving it significantly illiquid.

During the period under review, the company recorded a 193% increase in revenue to ZWL$40,93 billion owing mostly to rental income.

In the 2022 comparative period, revenue was ZWL$13,95 billion.