- Company suspends issuance of bonds
- Acquisition of new businesses delayed
- Refurbishment of malls put on hold
The BSE-quoted property firm, Prime Time Properties, was compelled to halt acquisition of new businesses and development of some projects as a result of the COVID-19 pandemic, Managing Director (MD) Sandy Kelly has said.
Announcing the financial results for the six months ending 29 February 2020, Kelly said with a positive first six months of trading in the current financial year, shortly thereafter the economic effects of the COVID-19 worldwide pandemic were rapidly felt in Southern Africa. He added that when the nationwide lockdown commenced, Prime Time’s commercial development at Setlhoa – Pinnacle Park was just a few weeks away from completion and at an advanced stage of tenanting.
This, together with a planned refurbishment at South Ring Mall in Gaborone and an extension at Boiteko Junction in Serowe, has been put on hold, as has assessment of some potential properties identified for acquisition, according to Kelly. Prime Time had received overwhelming support from shareholders to enter into an agreement to acquire Lobatse Junction here in Botswana as their core domestic market. Commencement of this has had to be delayed, as has completion of its Pinnacle Park office development at Setlhoa where Prime Time had expected to be welcoming tenants this month.
“It is deeply frustrating that the onset of the COVID-19 pandemic came at a time when we had such an exciting line-up of projects in the pipeline,” said Kelly. “It is documented that we were pursuing a Rights and Bond issuance to bring some of these projects to fruition, which we have had to postpone. However, we are fully cognisant of the necessity of the measures that have been taken and our desire to grow the company for the benefit of its unitholders is truly brought into perspective by the hard work of those striving to get us back to a situation of normality in which we can all thrive.”
Further, he said, Prime Time is working on getting these projects back on track as quickly as possible. In the case of Pinnacle Park, he hopes to be able to have his first tenants moved into the offices by the end of August. “During the months of April and May 2020, the group has had to give some rental discounts to tenants adversely affected by the necessary government interventions which have restricted, and in some cases prevented, their ability to trade,” Kelly said. “The group is dealing with these concessions to tenants on a case-by-case and month-by-month basis. On the cost and cash flow side, management is doing all it can to minimise the negative effect of the rental lost on the group.”
The MD said some cash flow relief has been obtained from several of the group’s funders while talks are still in progress with others. Operating costs are being cut where possible and a good recovery of utility charges is being maintained. “Recent reductions in the London Inter-bank Offered Rate (LIBOR), Johannesburg Interbank Average Rate (JIBAR) and Botswana prime interest rates will all impact positively on the group’s total interest cost over the next few months,” he announced.
“The board would like to assure all its stakeholders that its current priority to ensure that the best interests of the Group’s entire value chain, from service providers to tenants and up to funders and unitholders, are protected and can survive post-COVID-19.”
Prime Time released its 2020 interim financial results showing 9 percent year-on-year increase in contractual lease revenues from P71 million to P78 million. The company’s investment property value grew by 8 percent following the acquisition of its first two South African properties in late 2019. The value grew from P1.3 billion to P1.5 billion. Two new properties were acquired in South Africa in this six-month period.
Riverside Junction is a mixed-use property well located in Sandton, Johannesburg. The property was acquired for R85million, reflecting a 9 percent return and comprises Grade A offices, retail and restaurant space. Prime Time also acquired Portion 7 of erf 597 Spartan Extension 12 in the province of Gauteng for R50million. This A Grade logistics warehouse is occupied by Logwin Logistics on a five-year lease and will offer a net initial return of 9.4 percent, according to the company.
“We are very pleased with the two acquisitions made in South Africa in the latter stages of 2019,” said Kelly. “The properties added high quality, ready income producing assets to the portfolio of a standard that is difficult to find elsewhere on the continent.”
Vacancy levels across the portfolio edged down to slightly below 3 percent. “Having fallen substantially in the last financial year, vacancy rates have normalised across the portfolio at a little under 3 percent,” he noted. “Our management team are striving to reduce this further, but there will always be a level of market churn in a portfolio of the size Prime Time has grown to.”
The footprint of the lettable space increased with the addition of the South African properties and the extension to Pilane Crossing. The mall, which is now 100 percent occupied with Mr Price finally having been able to commence trading, is reaping the benefits of the considerable efforts made by the management team. During the reporting period, Prime Time made P34.6 million in profit.