Prime delivers strong results despite macro economics headwinds
BSE listed diversified property group Prime Time today reported solid financial results for the financial year ended 31 August 2022, despite rising interest rates and inflation impacting on global consumer and business confidence.
“This strong set of results is encouraging, especially considering the global and domestic macro- economic backdrop against which it was achieved. Driving income growth and managing costs in the current environment is challenging,” commented Mr Sandy Kelly, Director.
Contractual rental income and investment property values increased by 12percent year- onyear. Prime Time reported a year- on- year increase of 13.5percent in its Net Asset Value ( NAV), driven by the inclusion of Lobatse Junction at the start of the year under review and a positive valuation uplift in the Zambian and in Botswana portfolios. The overall portfolio performed well, with a strong occupancy rate of 98percent for the year ended
31 August 2022, compared to 97percent in the prior financial year. In Botswana, PrimeTime opened Lobatse Junction retail centre in October 2021 and completed the long- planned refurbishment of South Ring Mall in Gaborone at a cost of R2.9 million.
“Lobatse Junction is valued at P114 million and comprises 9 000m2 of retail space with 39 national and regional tenants, including SPAR as an anchor tenant. It was 100percent let when it opened in October 2021, with full rentals reflecting from November 2022. The completion of the South Ring Mall refurbishment is in line with our ongoing commitment to maintain and enhance the attractiveness of our assets to ensure long- term tenant retention,” commented Mr Kelly.
The Group’s two properties in South Africa traded well with a segment profit of P3.5 million compared to P2.1 million in the prior financial year. This portfolio comprised 6percent of PrimeTime’s market value and the Group expects to see improvement in income going forward.
The contraction of property values in the Zambian portfolio over the last three reporting periods was stymied, with the portfolio showing marginal appreciation year- on- year. The six properties in Zambia comprised 30percent of the Group’s market value as at 31 August 2022, which included the addition of 187m2 of new office space to PrimeTime’s G4S head office in Lusaka at a cost of US$ 135 000 to meet the tenant’s requirements.
We made significant progress with the filling of vacancies in Zambia, with most of the space now occupied,” commented Mr Kelly. “We closed the financial year with a 3percent vacancy rate in Zambia, which has further reduced post yearend,” he said. The Zambian portfolio swung from segment loss of P35.8 million in the 2021 financial year to a contribution of P26.7 million.
The impact of the fair value adjustments on properties and the foreign exchange gains on foreign operations and loans - some of which have been reclassified from profits to other comprehensive income retrospectively in line with international accounting standards - on earnings and profits is not realisable into cash or distributable income. “These adjustments therefore do not impact on distributable income, as they are unrealised and added back when calculating the debenture interest payable,” explained Kelly.
Group loan- to- value reduced from 57percent to 53percent, in line with its strategy to amortise a targeted portion of its debt finance over the next few years, as a hedge against rising interest rates and to ensure it performs within acceptable covenant limits.
The Group’s capital recycling programme resulted in the disposal of its Ramotswa and Ghanzi properties for P45 million during the financial year, with proceeds applied to the development of Prime Plaza II, PrimeTime’s first five- star green rated development.
“We are very pleased with our progress on our ESG program in our quest towards making all our properties environmentally friendly, not only as being “the right thing to do”, but for the short- and long- term economic benefits of reducing our tenants’ overall occupancy costs. Prime Plaza
II has been awarded a 5 Star rating by the Green Building Council of Southern Africa,” Kelly said.
In addition, the Group’s solar installation programme gained traction with the first of Prime Time’s roll- out of photovoltaic panels at Sebele Centre completed with Lobatse and others to follow. “Although current measures of amortising a portion of debt and continuing with minor property improvements and refurbishments may impact on distributable income in the short- term, the board firmly believes that the long- term benefits of these actions will position Prime Time well for future growth,” concluded Mr Kelly.
A total distribution of 12.66 thebe per linked unit has been achieved for the year ( FY21: 12.94 thebe per linked unit). A final interest payment of 4.00 thebe per linked unit for the year ended 31 August 2022 ( FY21 final interest payment of 1.33 thebe per linked unit) will be paid together with an interim payment for the year ending 31 August 2022, in March 2023.