While listed local property entities remain under pressure arising as a result of COVID-related effects on the property sector, low vacancy rates have been achieved in 2021 as compared to the 2020 levels on the backdrop of rebates extended to tenants to support their survival.
In its Market Outlook Research Report for 2022, Stockbrokers Botswana (SBB) says top line growth has been squeezed as a result and entities continue to expand their capital expenditure by acquiring stakes in foreign based properties as part of their geographical diversification.
The reports notes that PrimeTime released a resilient set of financial results for their 2021 year-end reporting period. The entity has had significant property improvements owing to the now fully tenanted Pinnacle Park Phase I with a quality tenant base and Lobatse Junction retail shopping centre that was opened in October 2021 that now operates at full tenancy, the completed refurbishment of the Southring Mall in Gaborone, and the acquisition of Plot 54359 in the Gaborone CBD and two properties acquired in South Africa in 2020.
“All these capital expenditures had pending costs as at the reporting period ended 31 August 2021, as such we expect distributions to linked units shareholders to remain low as these costs are settled,” says the report. “Going forward the sectorial diversification should bode well for PrimeTime coupled with improved lease escalations and accelerated credit collection as economies return to normality, affording tenants a chance to settle their arrears. Revenues from the recent developments will drive growth going forward.”
RDC Properties continues to benefit from its robust diversification strategy. Capital growth has now been held beyond a full reporting period, thus registering a 17 percent increase in revenue amid the global economic downturn.
It is expected that the recently added properties to the portfolio will further enhance profitability. The Radisson RED Hotel Rosebank Johannesburg has been added to the hospitality portfolio and commenced full operation in October 2021. The 108 Albert Rd Joint Venture is almost done. The acquisition of Xiqulene in Mozambique has been concluded though value realization remains clouded by the terrorist attacks in the north of the country while the Tower Property Fund Limited acquisition has been successfully completed. SBB expects it to yield results in the ensuing year and it is generally expected that RDCP will yield results better than the previous year on the back of a well-diversified portfolio.
New African Properties (NAP) is expected to acquire retail spaces in Ghanzi and Ramotswa following a 2 247 m2 retail property acquisitions in Maun. New acquisitions and strong tenant base will sustain the counter for the foreseeable future.
Turnstar saw improved performance on their interims on the back of improved collections of arrears following rental concessions extended to clients in the previous reporting interims (31 July 2020). The appreciation of the US Dollar against the Botswana Pula was lower than the 2020 interim period, hence a lower forex loss on the US dollar loan. The group is currently clouded by scandals with regard to management and shady deals, which may dampen investors’ appetite for the counter.
Letlole La Rona (LLR) posted impressive results for their full year ended 30 June 2021, with substantial increase in revenue as collections accelerated to 110 percent. Its industrial exposure of 66 percent proved to be a windbreaker against tempestuous headwinds affecting most property counters. The six industrial properties that were acquired at the end of 2020 bore fruit in 2021 as they significantly contributed revenue.
“Another acquisition of 32.79 percent shareholding in JTTM Properties (Proprietary) Limited is expected to be finalised in the near future, which will further enhance profitability,” says the SBB report. “The bottom line that was suppressed by low revaluation gains is expected to normalise as the economy comes back to normality. Management issues of Letlole seem to be resolved, as such; we expect appetite for the stock to increase. The counter closed the year as one of the top 10 gainers for the year having gained 11.3 percent to trade at P2.55.”
Far Property Company, like Letlole, has a larger stake of their portfolio invested in the industrial sector. It has therefore remained profitable as evidenced by the resilient financial results for the full year ended 30 June 2021.‘Key driver for the group’s revenue in 2022 will be increased economic activity that will buoy the industrial, commercial and residential sector’s growth,” it says. “Two commercial properties that are close to completion will benefit from the expected improvement in the macro-economic environment, and ultimately contribute to the group’s revenue streams.”