Botswana Stock Exchange listed Property Group Primetime closed in on the first six months of their 2019 financial year with significant increase in their key revenue driving measures.
According to the Group’s unaudited financial results for the half year period ended February 2019 the business realized growth in contractual lease revenue registering over P71.7 million for the period under review compared to just over P60 million recorded in the six months’ period ended February 2018. In rental income space the Group gathered over P75.2 million compared to over P64.6 million posted for the 2018 half year ended.
According to the financial results commentary published on Wednesday the 19 % growth in rental income is attributable to inclusion of revenues contributed by new developments completed in the prior financial year. he three priorities being Chirundu Mall in Chirundu, Zambia which opened at the end of April 2018.Munali Mall in Lusaka and the Design Quarter at Setlhoa in Gaborone which were both completed right at the end of the last financial year in August 2018, with space steadily being taken up in this reporting period.
On another positive note, during this half year period the PrimeTime registered significant shrink in vacancy rate signaling positive tenancy response from the property market across the rest of the company portfolio. According to the financial report, the vacancy rate has been diminishing since the last year end. Observing key changes in some portfolios, at Pilane Crossing, one of Prime Time new properties Exact and Options clothing retail outlets have signed leases, with Exact opening for trade just before Christmas.
The final tenant at PwC Office Park Lusaka took occupation at the end of 2018 following the extensive refurbishment made to the property. The financial report further revealed that Major tenants renewing their leases with PrimeTime includes Letshego Holdings Limited which is occupying PrimeTime properties at Letshego Place, the South African High Commission plus PEP and Ackermans at Nswazwi Mall, Francistown.
According to management, the combined effect of the above has been to normalize the Group’s vacancy rate back down to 3% from just over 5% where it stood at the last year end. “Our anticipation is that the vacancy should reduce further as Munali, Chirundu and Design Quarter complete their respective letting” highlight Primetime executives in the report.
Sharing on this current financial year’s projects, the company management says major refurbishments and maintenance plans predominantly the completion of the Pilane Crossing extension which is well underway and 50% let. Furthermore, Primetime says the road widening project in Setlhoa is complete improving the accessibility of both Sebele Centre and the Design Quarter.
“The ground lease extension agreements at both Boiteko Junction in Serowe and our retail centre in Ghanzi are scheduled to complete in the next few months,” highlighted A L Kelly Primetime Managing Director. On the future outlook the Kelly noted that under its investment property pipeline is a commercial development at Setlhoa, Pinnacle Park. The company says the estimated build cost for Phase I stands at over P30m excluding land which is already acquired noting that funds have already been secured and the construction is underway with completion scheduled for March 2020.
“Elsewhere we continue to assess other opportunities outside of our existing geographical bases and expect to make investments in the very near future,” added PrimeTime Boss. PrimeTime Properties is a variable loan stock company listed on the Botswana Stock Exchange. It is regarded as one of the major property investment vehicle for institutions and private investors in Botswana, with the number of shareholders growing from 1337 on listing in Dec 2007 to close to 2,000 today.
â€¨â€¨It is invested in a diversified portfolio of office, retail and industrial properties throughout Botswana and more recently in Zambia. The portfolio was valued at BWP 764 million at our 2015 financial year end, a figure we anticipate to rise substantially in the 2016 year end valuations as major acquisitions will be reflected in the 2016 figures.â€¨â€¨The performance is reflected in the solid share price and consistent increase in valuation and distribution year on year.
Looking forward, MD Kelly shared that the company is pursuing a policy of risk diversification by seeking investments elsewhere beyond Botswana’s borders. To this end it acquired two properties in Zambia on a sale & leaseback basis from G4S Zambia and continues to look for opportunities outside the country.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”