First Mutual Properties releases its 2021 Annual Report

By Published On: June 6th, 2022Categories: Corporate announcement, Earnings

Chairman’s Statement

Overall occupancy level averaged 89.93% in FY2021 compared to 88.64% last year

Overview of Operating Environment

The COVID-19 pandemic affected the operating environment, particularly the cost of doing business and work practices. However, despite the pandemic, Zimbabwe’s economic recovery continued, with the Gross Domestic Product (GDP) expected to grow by between 3.5% and 5.5% in 2021 due to relatively good performance of the agricultural, mining and manufacturing sectors. Annual inflation declined to 60.7% in 2021 from 348.6% in 2020. Authorities should, however, continue to implement prudent policies to sustain the economic recovery process as well as contain inflationary and exchange rate pressures experienced in the final quarter of the year. These developments have important implications for the property market in general, and the First Mutual Properties’ business as discussed in this statement.

Property Market Overview

The property market experienced supply-demand imbalances that limited space absorption. The excess supply of space is mainly historical space redundancy, with the sectors worst affected being the Central Business District (CBD) offices, high-density suburban shopping centres and the specialised industrial sectors. However, the aging product is mostly affected by the unsustainably high investments required to revamp and modernise the product. There has been a gradual shift to a hybrid of remote working and office presence during the year. The market also experienced strong demand for traditional retail shops, retail warehousing, light industrial properties and office park properties.

As a result of effective tenant relationship management strategy, the Company enjoyed an improved collection rate of 82% during the year compared with 80% last year.

New property developments are taking place for owner-occupied industrial / retail warehousing, office parks, and residential purposes. By and large, new commercial developments were affected by various factors including supply chain delays for imported materials.

Inflationary and exchange rate pressures continued to erode the real value of rentals. In response, property owners have adapted rental pricing models by shortening rent review periods and closely tracking market developments.

Business Performance Overview

The Group posted positive results during the year despite the challenging operating environment. The Group’s inflation adjusted Net Property Income after administration expenses grew by 51% to ZWL 171.4 million (FY 2020: ZWL 113.4 million) driven by growth in inflation adjusted revenue of 39% to ZWL 594.75 million (FY 2020: ZWL 427.15 million).

Revenue is predominantly rental income. In historical terms, revenue grew by 167% ahead of inflation at 60.7%, driven by the repricing of rentals and stable occupancy level during the period. Sustained revenue growth was on the back of rental income growth anchored by relatively high average occupancy level of 89.93% during the year (FY 2020: 89.67%).

The Group continued to work closely with the tenants to ensure mutually-beneficial and sustainable business relationships. Various initiatives were pursued during the year to sustain the Group’s business operations and the tenants’ as well. The Group values its tenants’ experience, and in keeping with this objective, it committed ZWL 25.8 million and ZWL 15.8 million towards maintenance and improvements respectively during the year. As a result of effective tenant relationship management strategy, the Company enjoyed an improved collection rate of 82% during the year compared with 80% last year.

Property Valuations

An independent property valuation conducted by Knight Frank Zimbabwe as at 31 December 2021 valued the property portfolio at ZWL 22.039 billion (FY 2020: ZWL 9.396 billion). The growth in property values of 135% is driven by the growth in rentals as capitalisation rates remained unchanged during the period.


The Group is at pre-construction stage of the Arundel Office Park extension with the design development of the architectural plans completed. The drawings and the Environmental Impact Assessment (HA) study prospectus are currently being considered by the relevant Regulatory Authority. The project is expected to go for tendering in Q2 2022.

The Group commenced the development of a retail warehousing facility in Mbare, Harare. The property has been pre-let to Gain Cash and Carry on a long-term lease. This is a syndicated project involving First Mutual Properties with a target equity participation at 47% valued at USD 260,000, and some institutional investors. The project was 30% complete as at 31 December 2021.

The Group entered into an agreement of sale to acquire a retail property in Chivhu at a cost of USD 390,000 before transfer costs. The property is adjacent to an existing retail site where TM Pick n Pay is the anchor tenant. This acquisition provides greater scale and scope for a comprehensive retail development to service the expected growth of Chivhu driven by the mining activities currently being developed in the area.


First Mutual Properties Limited remains committed to enhance its positive contributions to the goals of sustainable development. As evidence of our commitment to sustainability, the company has completed its first solar power plant infrastructure development at First Mutual Park. This is the first of many solar projects we plan to continue rolling out. The business is also working on ensuring its old and new developments are aligned with eco-friendly and green building requirements.


At a meeting held on 23 February 2022, the Board resolved that a final dividend of ZWL 20,031,335 being 1.6196 ZWL cents per share be declared from the profits for the quarter ended 31 December 2021. The dividend will be payable on or about 27 May 2022 to all shareholders of the Group registered at close of business on 13 May 2022. The shares of the Group will be traded cum-dividend on the Zimbabwe Stock Exchange (ZSE) up to 10 May 2022 and ex-dividend as from 11 May 2022. This brings the cumulative dividend for the year to ZWL 45,176,042.

Business Outlook

The economic outlook remains favourable despite high levels of uncertainty due to resurgence of inflationary pressures and COVID-19 induced cost push factors particularly logistics and shipping costs as well as delivery delays. These developments will put undue pressure on the cost of doing business and execution of development projects. On a positive note, the favourable economic outlook is expected to stimulate the demand for quality real estate product.

The Group remains alive to the socio-economic developments in the country. We will continue to scout for opportunities within the market to further grow and differentiate our property portfolio by sector and location. Further, the Group will continue to invest in its existing portfolio in order to improve the long-term return profile. Various initiatives will be explored and implemented to sustain business operations and deliver favourable returns to its key stakeholders including the shareholders.

E K Moyo

23 February 2022

Related download

FMP – 2021 Annual Report.pdf