Real Estate Investments Zambia Plc (REIZ) posted reduced profits after tax of K2.8 million during its 2018 financial year down from K25 million recorded in 2017, triggered by a decline in rental income, data shows.

And the company has projected that the property market is likely to remain challenging this year.

According to a statement of the group’s results for the year ending December 31, 2018, REIZ’s profit after tax dropped to K2.8 million last year from recording K25 million earned during the corresponding period in 2017, triggered by a decline in rental income, among others.

Company data shows that rental income declined during the period under review as a result of vacancies at Arcades Shopping Mall, one of the group’s major revenue earners.

“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 per cent. The refurbished mall was relaunched in the fourth quarter of 2018 and trading began to normalize,” REIZ stated.

“Revenue was further adversely impacted by the rental remissions of ZMW3.1 million granted to deserving tenants at Arcades Mall as a goodwill gesture during the redevelopment period, which accounted for 4.8 per cent decline in revenue.”

The LuSE-listed company also noted the kwacha’s depreciation, particularly in the final quarter of last year, as one of the other contributing factors in its reduced rental income.

“Depreciation of the ZMW against the USD that resulted in exchange losses of K28.3 million on translation of the company’s foreign currency denominated liabilities in 2018 compared to only K66,000 exchange loss in 2017,” it stated.

And the company has projected that the property market is likely to remain challenging this year.

“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,” stated REIZ.

REIZ, formerly Farmers House Plc, is primarily involved in investment, development and restructuring of commercial and non-commercial property for letting.