ZIMRE Property Investment (ZPI)’s plan to dispose of its three prime properties has been put on hold due to complexities surrounding the exchange rate on United States dollars and bond notes.
By Fidelity Mhlanga
ZPI managing director, Edson Muvingi said the currency changes that are existing in the market have made the sale of Zimre centres in Mutare, Harare and Masvingo difficult, as the company dreads to lose its money.
“Conclusions of the negotiations have been very difficult on our part and on prospective buyers. Because on our part we have been looking at currency changes and say when we received this money what do we do with it. Are we going to quickly put it on something else because it’s a hedging arrangement we are worried about then all of a sudden you find that building material has gone up you are stuck with the money which is also deteriorating,” Muvingi said at the company’s annual general meeting yesterday.
He said what made the situation complex was that proceeds from the disposal of the property would be used to build office parks.
“It’s like an asset swap. We wanted to dispose in order to build, we have pieces of land where want to build an office park. This is where we wanted to deploy the money. We did not want to sell so that we get cash. This is where our problem is. The direction is if we sell and we can’t build, it doesn’t help us,” he said.
“You know if you have bond notes and what is happening between the bond notes and United States dollars. Much of the building material is imported. For us it’s very difficult to convert that money into foreign currency to buy material,” he said.
“What value we will get if we sell and what we do with it.”
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Though Muvingi could not divulge the cost of the buildings, he said for the time being it made business sense to retain the property than dispose it.
Muviringi said the company will retrench eight workers at the beginning of next month.
“We have cut salaries and we retrenched last year and we have reduced our allowances. We are a very lean organisation. We will get down to 15 and we will retrench eight workers.
He said the property firm voids were at 26% as of end of May, adding that rental negotiations with tenants would not add value as most of them do not even have the capacity to pay as they were headed for collapse.
“Companies are closing, moving out of the Central Business District, buying their smaller properties and some are even operating from home we have seen that.”
