Higher costs weigh on Overseas Realty 4Q
Overseas Realty Ceylon PLC’S revenue languished and profits fell during the three months to December 31, 2019 (4Q19), as the company received less rental income from its World Trade Centre (WTC) office towers, amid a rise in costs.
The company, which engages in renting out office space at its WTC twin towers and mixed development projects, reported revenues of Rs.2.6 billion for the quarter under review, compared to Rs.2.5 billion in the same period a year ago.
The top line languished due to the slowdown in rental income from its office space at the WTC. The company stated it is upgrading common facilities at the two towers. “The on-going refurbishment and upgrading programme to the common facilities of WTC Colombo is currently on schedule, with the intention of continuing to provide a superior facility and service to tenants and visitors,” a company press release said. Havelock City Residential project is Overseas Realty’s flagship project and it is currently in its final phase, which comprises of two new luxury residential towers expected to be completed in end-2020. The revenue from apartment sales for the quarter under review was Rs.1.98 billion, little moved from a year ago. “Havelock City Residential is currently handing over completed units of Phase 3, Stratford and Melford Towers to its buyers having obtained the COC from the UDA and the required certification from CMA.
The construction of the two new luxury towers of Phase 4 is currently underway; Phase 4 apartments are scheduled to be ready by the end of 2020. A select number of units of phase 3 are available for buyers who wish to move in immediately,” the press release said.
“Mireka Tower at Havelock City, the 50-storey Grade A office tower, is currently in the process of leasing out distinctive workspaces. The adjacent Mall at Havelock City has commenced pre-leasing spaces to international and local retailers, entertainment and F&B operators,” it added.
The company reported earnings of 68 cents a share or Rs.854.7 million for the Octoberdecember 2019 period, compared to the earnings of Rs.1.19 a share or Rs.1.49 billion in the year earlier period.
Meanwhile, for the year ended December 31, 2019, the company reported earnings of Rs.3.56 a share or Rs.4.4 billion, compared to the earnings of Rs.3.87 a share or Rs.4.8 billion in FY18.
The direct operating expenses and cost of sales of apartments rose by 9 percent year-on-year (YOY) and 69 percent YOY to Rs.836.2 million and Rs.3.8 billion, respectively.
The company’s 50-story office tower and a shopping mall is scheduled to open for business in mid-2021 and the pre-leasing of space in both office and shopping space has begun.
As at December 31, 2019, Singapore-based Shing Kwan Investment Company Limited held a 38.43 percent stake in the company while another 12.77 percent and 3.08 percent stakes were held by Shing Kwan (Pvt.) Limited and Shing Kwan Investment (Singapore) Private Limited, respectively.