ZIMBABWE Stock Exchange-listed property firm Dawn Properties is still locked in negotiations with its major tenant, African Sun, on a possible relinquishment of some of its properties as the firm seeks to diversify.

Dawn group chief executive officer Mr Mike Manyika last week told shareholders at the company's annual general meeting that negotiations were progressing reasonably.

He said the group had received offers from CBRE management for the management of its properties.

Analysts yesterday said as the tourism industry recovers, Dawn will unlock value in the property portfolio and rentals will increase on the back of refurbishments being carried out by African Sun.

Zimbabwe's tourism sector is expected to grow by 6 percent this year.

They (analysts) said Dawn has got some properties which need reinvestment and if those properties are upgraded the company will realise growth in rentals.

"The deal is still open, these guys might decide to keep things as they are now," said an analyst. Dawn owns and controls all the seven hotel properties occupied by African Sun, which were spun out of the Zimbabwe Sun group back in 2003 and listed on ZSE.

Given the poor performance of revenues from its hotels, Dawn is scouting other possible avenues of revenue growth as it considers its options to obtain better yields for its properties.

Problems between the two companies started after the collapse of the US$10 million deal with the Industrial Development Corporation of South Africa.

The deal collapsed after the Dawn board vetoed an attempt by African Sun to pledge Crowne Plaza Monomotapa, the leaser's premium hotel property in Harare, as collateral in the transaction.

In its trade update the company said all its business units were profitable in the first months of the year to August 31, 2011 and profits are expected to be much higher at year-end.

During the period under review the company said revenue was up 15 percent of the same period last year.

In the year, Mr Charles Mataure, Mr Shingi Munyeza and Mr Jim Worsfold resigned from the board and are yet to be replaced.

African Sun owns 13,1 percent of Dawn, Old Mutual Life owns 9,20 percent and an additional 8,6 percent is owned by Old Mutual Zimbabwe.

Source: The Herald