Turnstar Managing Director, Gulaam Husain Abdoola has reported that the property market has remained relatively strong despite the recent economic slowdown. But a drop in the demand of residential houses is a major concern in the industry.
Abdoola has said the Botswana property market experienced varied challenges with some sectors performing better than the others. Reporting on the performance of Turnstar during the year 2016, the Managign Director said during the past year, the industrial sector continued to be stronger than the other market segments.
He indicated that the commercial office space has been the most challenged with a high number of commercial properties being introduced to the market, especially in the Central Business District (CBD) during the past years. “The drop in demand for residential housing is a major concern,” he emphasised.
Abdoola says many new retail malls are in the pipeline and it will be a challenge for existing malls and the new entrants to share the same “pie”. However, he points out that Turstar’s property portfolio shows attractive future prospects supported by strong underlying contractual cash flows, escalations and a healthy lease expiry profile.
“Turnstar’s portfolio has limited exposure to the Botswana office sector, which is currently in a state of oversupply. The group has exposure of 75% by value, and 72% by GLA, to the retail sector which is mainly comprised of large listed or large national companies,”he writes in his report. He says the portfolio has a healthy lease expiry profile. Approx. 53% of leases expire in 2019 and beyond (by GLA). The leases expiring in 2017 and 2018 are routine renewals and the vast majority of them will be renewed at current market terms.
Abdoola reflects on 2016 and points out “This has been both, a sad and prosperous year for Turnstar. On the 27th November 2015, our Chairman, Mr Cuthbert Moshe Lekaukau passed away. Mr Lekaukau was the Chairman of Turnstar from its inception. His dedication and wise counsel was invaluable and his passing has left a void. He is missed by the entire Turnstar team. The Board is currently evaluating various options to fill the Chairman’s position.”
The Turnstar Managing Director is however pleased that the Company performed extremely well as is evidenced by the results. He points out that the Tanzanian subsidiary, Mlimani Holdings is becoming more significant each year, in terms of contribution to the Group. The BWP/USD exchange rate is also a favourable factor. “At Mlimani, the bulk land has appreciated significantly, and this is reflected in fair value gains.”
Turning to one of their star malls in Gaborone, Abdoola says the construction work at Game City is nearing completion. He observes that it has been extremely difficult to construct and carry out renovations to an operating mall. “We have and continue to do everything possible to minimise the disturbance and inconvenience and are thankful for the cooperation of tenants and customers. However, we assure you that the improvements will be well worth the wait and inconvenience. Mlimani City construction is also well underway and is scheduled to be completed by the end of this year,” he says.
Turnstar is currently in the process of carrying out a feasibility exercise on the hotel project at Mlimani and will reach a decision on its viability, shortly. Turnstar intends issuing a USD 30 million, 7 year convertible bond in the market. These funds will be raised to fund the construction of the Mlimani City developments. This form of funding should boost the profitability and cash flow of Turnstar.
Abdoola says Africa still remains to be further explored for opportunity, and they are very keen to look at countries they believe they can do business in. “Several Organisations and Governments are in discussions with us to consider various developments. Mlimani Holdings has a proven track record and has turned out to be a successful story in terms of profitable partnerships. However, we maintain a conservative approach and will undertake projects which are within the capacity of Turstar.”
The Group continued to post pleasing results for the year, despite challenging market conditions. “The share price has performed beyond expectations and we are very pleased that the value in Turnstar is now being recognised.” According to Abdoola, Turnstar remained the most diversified property Company on the BSE with property assets valued at over P2 bn. The Group’s Tanzanian subsidiary, Mlimani Holdings Limited, generates US Dollar revenue. Turnstar is a fully integrated internally managed property company, employing 125 staff.
Group revenue increased by 5% from the prior year, to P247.6M. The rental income from the Company’s Botswana portfolio decreased by 4.2% due to the sale of Fairgrounds office park property, whilst the rental income from the Tanzanian portfolio increased by 16.7%. Approx. 49% of the Group’s total rental income, is in US Dollars.
Tanzania continues to be one of the fastest growing economies in sub Saharan Africa. The economic growth is spearheaded in the Gas, petroleum, mining, tourism, agriculture and manufacturing sectors. The retail and industrial property sectors in particular are flourishing. The Government is focussed on growing the economy and welcomes foreign investment.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.