Real Estate Investments Zambia Plc Group reported a profit after tax for 2018 of K2.8 million compared to K25.0 million for 2017.
Company Secretary Moses Vera says revenue declined in 2018 by 22.4% to K50.6 million from K65.2 million in 2017 while profit from operations increased to K54.1 million in 2018 from K42.7 million in 2017.
This is contained in an Abridged 2018 Financial Statement posted on Lusaka Securities Exchange (LuSE) monitored by Money FM News.
Mr. Vera says the positive impact on the operating results came from continued cost-control and rightsizing measures which saw operating and administrative costs reducing by 5.4% notwithstanding inflation driven cost increases year on year.
He says another impact is on the depreciation of the Kwacha during the year which accounted for approximately 10.8% favorable impact on rental revenue arising from US Dollars based operating leases.
“Investment properties appreciated in Kwacha value terms due to approximately 19% devaluation of Kwacha from K10.01/$ at end of 2017 to K11.89/$ at end of 2018, leading to a net change in fair value of K26.3m in 2018 compared to K2.2 million in 2017. In USD terms, the fair value of the investment property portfolio declined by 17% due to vacancies and falling market rentals,” he said in the statement.
Mr. Vera states that the adverse impact on the reported profit after tax was attributable mainly to decline in rental income as a result of vacancies at Arcades shopping mall, one of the Group’s major revenue earners, during the period of redevelopment which saw vacancy rates peaking at about 35%.
“The refurbished mall was re-launched in the fourth quarter of 2018 and trading began to normalize. Revenue was further adversely impacted by the rental remissions of K3.1 million granted to deserving tenants at Arcades mall as a goodwill gesture during the redevelopment period which accounted for4.8% decline in revenue,” said Mr. Vera.
An the acquisitions and developments during the year, the Group says it acquired Southview Park a housing complex situated in the Lilayi area, along Kafue road presently developed with 22 upmarket residential homes and plenty of bulk land.
Mr. Vera says the extent of the property is 11.4752 hectare constituting a significant land bank with immense future development potential.
He says the acquisition was in line with the Group’s strategic pursuit for sectorial diversification being the first time that a residential property has been added to the portfolio.
“Refurbishment and redevelopment of the Arcades Shopping Mall was successfully completed during the year. The project has resulted in the transformation of the mall into a modern one and has attracted a diverse range of shops and services. Redevelopment has increased lettable space and improved distribution of foot traffic across the mall,” he said.
“As for dividends, the Directors propose a final dividend of K0.13/share for shareholder approval at the Annual General Meeting that will be held in Lusaka on Wednesday 27th March 2019.”
And giving a business outlook, Mr. Vera says the property industry is expected to remain challenging with most of the market forces that characterized 2018 expected to continue to prevail in 2019 particularly with regard to occupancy and rental rates which are expected to continue to face downward pressure in 2019.

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