Lusaka Securities Exchange (LuSE) listed Real Estate Investments Zambia (REIZ) recorded a steep decline in PAT earnings for the year 2018 to K2.82 million from K25.03 million on account of a higher exchange loss and redevelopment costs last year. Revenues slowed to K50.57 million, 22.4% lower from K65.16 million a year ago attributed to business disruption at its cash cow asset Arcades Shopping center that underwent redevelopment and upgrade. To that effect occupancy waned to 35% vacancy rate reflecting rental income forgone compounded with a goodwill rental remission gesture of K3.1 million that added to redevelopment costs.
The real estate mogul had to bear increased finance costs by K6.1 million which took the brunt of 19% Kwacha depreciation causing a translation effects of K28.33 million on the company’s foreign currency denominated liabilities. This was absorbed as an exchange loss that gave earnings a hair cut to K2.8 million. Earnings per share declined to K0.05 from K0.44 in 2017.
REIZ asset size grew 5.55% to K1.03 billion from K0.97 billion in the period.
Despite 2018 being a challenging year for REIZ, the property company was resilient enough to generate a positive contribution to costs through leaning its administration cost lines and making strategic investments through acquisitions whose benefits will bear fruit in 2019 and onwards.
REIZ acquired South View Park a residential property complex situated in the suburbs of Kafue road with 22 houses that will be expected to widen its revenue stream in addition to the expansion program on Arcades whose occupancy is forecast to increase, as redevelopment is now complete. Arcades boasts of 3,900 square metres lettable space.
REIZ ordinary stocks were as at 15 March trading for K5.99 while preference shares sold for K4.7 per share.