First Mutual Properties Reports US$57.28 Million Loss in FY24

First Mutual Properties (FMP), a real estate company, experienced a significant financial setback in the fiscal year ending December 31, 2024, reporting a loss of US$57.28 million.

This downturn contrasts sharply with the previous year's profit of US$93.32 million. The primary reason for the loss was a US$52.57 million loss attributed to a fair value adjustment on the company’s investment properties. An independent valuation by Knight Frank Zimbabwe led to a 26.04% reduction in the company's investment portfolio.

 This valuation placed the property portfolio at US$132,948,000 as of December 31, 2024, a decrease from US$179,772,504 in 2023 . The decline in value was due to the adoption of the US dollar as the functional currency, which impacted how the prior year's investment property value was determined.

The company's total assets also decreased to US$136.95 million from US$185.91 million in the previous year, which affected the firm’s liquidity. FMP had US$0.77 for every dollar of short-term debt, indicating a reduced capacity to fund short-term operations. 

Despite these challenges, FMP is undertaking projects to enhance shareholder value, including the completed Arundel Office Park extension, valued at US$5.1 million, and a mixed-use development in Zvishavane.

Revenue increased by 31% to US$9.02 million, driven by property services income, US dollar rentals, and timely rental reviews. However, rental collection rates decreased from 85% to 75% due to tenants' financial difficulties.

Exchange rate volatility and an unsustainable parallel market premium negatively affected formal sector activities. In-store US dollar pricing became uncompetitive, shifting activity to the informal sector and constraining performance-based rentals. Contractionary fiscal and monetary policies also negatively affected liquidity, creating an uncertain business environment.

The company aims to adapt its strategies to protect shareholder value by prioritising capital management, stakeholder engagement, occupancy levels, and the quality of its property portfolio.