Business
10 - 26 January 2014 - The Observer
The Observer
The Observer 26 January 2014 -- 10
- 08 December 2013 10
149 companies apply
Properties : Best hedge against inflation
Suppliment
for liquidation
M
A
Mash Holdings property investment at its best
ashonaland Holdings Ltd,
fondly known as Mash
Holdings
in
T least 149 companiesinvestment
filed for
liquidation at isthe leading real estate
circles a High Court in
2012, failing the Zimbabwe high
company listed on to keep up with Stock
operational The company was incorporatedon
Exchange. costs a local think tank said in
Friday, and more 1969 Mash Holdings become
July 1966 and in are seen going under in 2013
as economic conditions worsen. to be listed
the first property company
Companies are battling with high financing
on the Zimbabwe Stock Exchange before
costs, with banks charging as much as 20
diversifying into the industrial sectors with
percent interest and the Zimbabwe Economic
emphasis on import substitution focussing on
Policy Analysis and Research Unit (ZEPARU)
light engineering business.
said most of those that applied for liquidation
It pursued its original property business
were on the basis that they could not pay their
alongside other interests. In 1987 Mash
debts
Holdings costs in Zimbabwe Ruwa which it
Labour acquired land at are among the
transformed into Africa while the electricity
highest in Southern the Ruwa Growth Point.
A satellite prohibitive and most was born.
costs remaintown east of Harare companies
are stuck with aged machinery that is expensive
to maintain.
The number of companies seeking
liquidation has progressively increased since
dollarisation in 2009. In 2010, 50 companies,
almost five times more than the prior year
T
Mash Holdings provided the bulk of built
environment infrastructure that forms Ruwa
town as we know it today. It went on to be
applied for liquidation. The number increased
to 73 in 2011 other landmark developments,
involved in and more than doubled in 2012
to 149.
including in parts of Greystone Park in
The
Harare.number could be higher in 2013 as
the In 2003 Mash Holdings the aftermath
economy is stuttering in went through
of restructuring that gave rise that extended
a disputed July 31 election a ‘new’ Mash
a
President Ltd, refocused entirely on real estate
Holdings Robert Mugabe’s 33-year rule and
a cash squeeze that has reduced consumer
investment. Today Mashonaland Holdings is
demand.
a fully fledged property investment company
Cecil Madondo of Tudor House
with a net asset value in excess 25 companies
Consultants who has managed of US100m as
at nearly independent said most companies
in the lasttwo decades, valuation. Its property
mix spans under office accommodation,
were placed across judicial management or
industrial, due to gross mismanagement, lack
liquidation health, retail and residential sectors.
It effective corporate governance structures
of also holds vast strategic land banks that
allow management to rebalance
and high level of indebtedness. its portfolio as
“You find a company technically insolvent
sometimes with more liabilities than assets
regardless of its viability,” he said.
He said undercapitalisation was a major
challenge facing most companies under
judicial management resulting in them failing
and when necessary. Mashonaland Holdings is developments aimed at realising a developer’s
a long term property investor, holding prime profit upon on-selling or retaining selected
property for the long term. Its returns are developments to grow its income base.
to buy basic material required to revive them.
“The major rental income and long term
therefore from problem we face as judicial
Mash Holdings in an investment
managers is lack of access to capitalcherished destination for the discerning investor who
capital appreciation. Given the time in order
to address these problems,” he said. inflation, appreciates the qualities of property as an
adage that property is a hedge against
Another Holdings’ investors are Saruchera
then Mashjudicial manager, Reggie confirmed investment class. These qualities have been
of Grantover the investment empowerment well documented. Property is a hedge against
winners Thornton said the time horizon.
law requiring foreign owned companies defied inflation, it contrasts the volatility of other
Indeed, the company’s asset base to be
51 percent owned by local blacks was making
the ravages of the pre-dollarisation hyper- forms of investment, and of course, there is
it difficult for potential investors to put their
inflation environment. A combination of the pride of ownership – we paint it when we
money in distressed companies.
the inherent virtues of property investment are happy with it, we can knock it around if we
“There must be a difference on how the
coupled is being bailed out,” he saw
companywith astute managementsaid. its value are disgruntled. We can touch it. Mashonaland
come out unscathed, if not enhanced. forces Holdings brings all these to the investor’s
He called for a legislation that
In addition to rental income and capital
shareholders of distressed companies to doorstep.
appreciation, Mash Holdings of creditors.
Furthermore, it has additional the
relinquish power for the benefit is a property
developer, structuredrelinquish shareholding,
“They don’t want to to undertake property
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they don’t have money to put into th R'W6