PEARL Properties recorded a 2, 71% decline in revenue to $8,778 million for the year ended December 31 2014 from $9,022 million in 2013 driven by a decline in rental income.
BY TARISAI MANDIZHA
In the period under review, rental income declined by 3, 47% to $8,700 million from $9,012 million in 2013.
The Pearl Properties general manager for developments Christopher Manyowa on Thursday said rental income decline was driven by a downward movement of the average rental per square metre to an average of $7,57 as compared to $8,28.
Manyowa said rental yield eased to 7,50% as compared to 7,80% in 2013 reflective of the decline in rental income.
“There has been stagnation and declining in occupancies across most sectors. The most affected is the Central Business District (CBD) office sector but they are strong demand for retail space,” Manyowa said.
He said there has been a decline in rental rates in the property market. He said pressure has been on sustaining rental and the market was now actually willing to have longer lease periods.
Manyowa added that the property portfolio performance, rental rate per square meter has declined to $7,57 in 2014 as compared to $8,28 in 2013.
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“Due to industrial space leased at lower rates so the decline in occupancy level in the CBD has a negative effect,” he said.
“In the property market in general they is persistent illiquidity, increased default rate and the viability of tenants is threatened.”
Manyowa said the rental arrears were amounting to $2,393 million and the company in 2014 was able to recover $800 000 from tenants.
During the period under review property expenses excluding provision for credit losses increased by 16,10% to $1,103 million due to expenses relating to vacant space while provision for credit losses expenses increased to $1,215 million as compared to $0,733 million reflecting the increasing tenant default rate.
Operating profit before tax and fair value adjustment declined by 23,5% to $3,580 million from $4,684 million due to staff rationalisation exercise that resulted in a once-off retrenchment cost of $216 000.
“Further, the effect of the external borrowing by the group to fund the acquisition of the remainder of lot 57, Mount Pleasant as reported in 2013, resulted in a finance cost of $0,643 million being incurred in 2014. The group will continue to explore opportunities internal efficiencies and devise cost containment measures to improve operating profit margins,” Manyowa said.
He said the market value of investment properties appreciated by 9,88% to $140,797 million as compared to $128,142 million due to the acquisition of the remainder of Lot 57, Mount Pleasant.
