Mortgage lenders eye Fidelity debtors book

via Mortgage lenders eye Fidelity debtors book – The Zimbabwe Independent March 24, 2016

FOREIGN and local mortgage lenders are jostling to buy about US$14 million worth of Fidelity Life Assurance (Fidelity)’s Southview Park debtors book and take advantage of Zimbabwe’s high interest rates, a top company official has said.

Taurai Mangudhla

Fidelity MD Simon Chapereka on Monday told businessdigest on the sidelines of the company’s analysts and media briefing that a number of potential investors in the mortgage market had expressed interest to buy the company’s debtors book at a discount, with talks now at advanced stages.

“Say somebody paid US$3000 and owes US$10 000 for the stand in South View Park, we are saying that somebody is willing to pay the current value for the balance of US$10 000 which maybe US$7 000 cash and they collect the balance plus interest over the ten years,” Chapereka said.

“This is good for them because they cannot earn 10% interest in Europe for instance. Imagine you are earning 0,1% interest in Europe now you earn more,” said NMB. Speaking during the presentation of the company’s full year financial results to December, Fidelity finance director German Mushoma said funds realised from the sale of Southview Park debtors will be used to develop the company’s newly acquired Langford Estate.

“We are already working on discounting debt out of US$36 million on Southview Park, say about US$14 million and this will reduce our interest, exposure and gearing,” Mushoma said.

“Discounting is an opportunity that has come in the market and will see Fidelity foregoing some of its potential interest. We are saying do we need to carry the liability of US$26 million or we can reduce it to US$13 or US$14 million? This is a financial decision which we have taken but our strategy remains the same.”

Southview Park, Chapereka said, was 85% complete with most of the reticulation almost complete.

In the period under review, Fidelity’s after tax profit remained flat on prior year at US$5,1 million while total revenues grew significantly to US$52,1 million, up from US$38,3 million in 2015 largely driven by the sale of stands at Southview Park. Mushoma said the company wants to get Langford Estates off the ground in the second half of the year. Fidelity in 2015 acquired 81% of CFI Holdings’ Langford Estates whose principal asset is an undeveloped piece of land valued at $22,3 million.

The company said total consideration for the 844 hectare land bank is US$18 million in the form of assumption of CFI bank debts amounting to US$16 million and settlement of US$2 million owed to other creditors.

Located next to Fidelity’s South View Park, Langford Estate is expected to yield 11 624 residential stands with expected profits of US$81,6 million at 92% return on investment, US$160,4 million at 203% return on investment and US$200 million at 254% return on investment. Development costs for the project are estimated at US$50 million, mainly comprising US$18 million for road and storm water drains and US$10 million for sewer reticulation.