This archive report was first published on 2 September 2019.
On September 2, 2019, UAP Holdings chief executive Peter Mwangi expressed concerns about the property market, anticipating further write-downs on the firm's portfolio.
According to Mwangi, despite rising occupancy levels in UAP properties across the region, property prices have been dropping, necessitating write-downs in values.
"The property market has been stagnating for the last couple of years, and our sense is that looking ahead, property prices will continue to soften," Mwangi said in an interview.
He emphasized the importance of recognizing diminutions in property values when they occur, stating, "We therefore think the prudent thing to do is to recognise these diminutions in value of properties when it happens."
UAP's investment income declined by 7.7 percent in the half-year period ended June 2019, from Sh2 billion to Sh1.89 billion, largely due to property revaluation.
Additionally, the bearish Nairobi Securities Exchange and depressed property market in Kenya contributed to a 25.6 percent decrease in UAP's investment income to Sh2.9 billion.
UAP had previously written down the values of its properties by Sh581 million in 2018, citing limited appetite for long-term property decisions by potential tenants in South Sudan.
Accounting standards require firms to carry out property valuations by independent valuers to reflect market realities.
Notably, UAP's Old Mutual Tower in Upper Hill, Nairobi, has achieved an impressive occupancy rate of 87 percent, surpassing the regional average of 60 percent.
