Mash Holdings rent collections drop to 70% in April due to coronavirus lockdown

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HARARE – Mashonaland Holdings says that the coronavirus-induced lockdown had seen rent collection levels drop to 70% from the average 95%. This comes as over 70% of the group’s tenants were prevented from being physically presented in the leased premises as they are qualified as non-essential.

According to the group, the national lockdown, while necessary, has had an impact on tenants’ beneficial occupation, putting pressure on collection and space absorption.  Mash Holdings has always been flagged by market analysts for its significant exposure to CBD property sector, which has been struggling as tenants increasingly prefer urban locations.

In a trading update for the first quarter, the group said that the drop in collection levels to 70% was a testament to the group’s tenant base but more broadly, the lockdown, reduced capacity utilisation across the economy and a continual decline in purchasing power had continued to put pressure on demand for real estate space.

In the period, rental income had increased 44% to $20 mln compared to the same period last year reflective of the positive impact of rent reviews during the quarter. In line with market practice, the group was reviewing rentals on a quarterly basis to salvage value. However, the group added that rent reviews are becoming more difficult as the tenants’ rent paying capacity continues to erode.

Occupancy level at 31 March 2020 grew to 79.2%, up 3% compared to the same period last year.

Property expenses to revenue ratio for the quarter was 17% compared with property expenses to revenue ratio of 18% achieved during the same period last year. Minor repair and maintenance expenses were incurred.

Administrative expenses to revenue ratio for the quarter was 26% compared with 31% which was achieved in the previous period.

The group said it had maintained fair values on investment property that were determined at 30 September 2019 and had spent $472,000 on refurbishment of its existing investment properties. Consultancy fees amounting to ZWL 1.1 million were spent on various projects that are currently underway.

In terms of the project pipeline, the construction of the 25-cluster houses in Westgate is set to commence in Q3 of 2020 and cost management measures, including pre-purchases of raw materials, will be put in place to ensure successful delivery of the project.

The group said in the short to medium term, the operating environment is likely to remain challenging but it would continue to explore opportunities to preserve shareholder value primarily through implementation of preleased developments and revitalization of existing buildings to ensure future-fit. Despite the development sub-market becoming risky, the group will put in place measures to enable implementation of some of its construction projects.

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