Friday, October 30, 2020

Primetime stays solid in the midst of global economic turmoil

Primetime, the Botswana Stock Exchange listed property outfit, ┬áloudly praised its tenants as it┬á posted “exceptional” half year results in the midst of the global crisis that has claimed the lives of a great number of companies.

In its results to the end of February, the company’s revenue swelled to P 17 million while profit┬ástood at P 4.6 million giving the moral to declare an interest payment of 7.56 thebe per linked unit interim which yields an annualised 12.1 percent on the issue price of P1.25. In addition, on an annualised basis, the yield has increased by a substantial 18 percent over the previous 12 months.

According to the company’s chairman, Tshipa Mothibatsela, and its managing director, Sandy Kelly, these results are a reflection of the “quality of the company’s tenant portfolio” and indicate the security which it offers to unit holders.

“Since Primetime’s inception, we have concentrated on assembling a blue chip list of tenants in our properties with the result that, even during periods such as we are experiencing now, our rental income remains reliable,” they said.

All properties in the portfolio are fully let with the exception of Barclays Plaza in Francistown where a small percentage of lettable area is due to be leased to a well established tenant.

The company said during the period there have been a number of lease renewals and that during the next six months, tenants with leases coming up for renewal have all given notice to renew or extend “largely on existing terms.”

The company is mindful of the economic slow-down in the local economy and said  its retail clients  who account for 50 percent  of the tenant  mix of its portifolio are still resilient.

“The retailers in our portfolio offer value for money and, in this economy, they will continue to operate satisfactorily. We see no failures of these tenants in the months ahead.”

The strength of the portfolio is evidenced by the minimal provision Primetime has had to make for doubtful debts – P44 000 or 0.29 percent of rental income.
 
The company said the ┬áeconomic situation in Botswana is “effectively a single product economy” and the effects of the global economic crisis are of concern to the directors.

Given the situation, they have tasked an independent entity to do the  valuations that will carry them forward which  will commence in August this year.

Primetime  said it is weighting options of venturing into some  property development  into some lucrative areas of Gaborone,  top of which being the Central Business District (CBD) and is also looking at other areas within the southern African region.
The move  into the region will be in line with other top two well known companies, the Botswana Insurance Fund Management (Bifm), under the guidance of Victor Senye, and  John Mynhardt of  Cash Bazaar Holdings.

The cash ÔÇôwashed Bifm, with fund┬á under its management being well over P 13 billion,┬á is firmly in control of┬á Botswana, Zambia and, to certain extent, Uganda and Kenya . Bifm is seriously studying Kenya again and┬á Namibia to complement its African expansion ambitions since it has the┬á lack of capacity to spend.

┬á“We have established that funding is available to increase our holdings in suitable additions to our portfolio but we would apply the same strict criteria to any new investments as we have in the past,” the company said.

Geoffrey Bakwena of Stockbrokers Botswana┬á added ┬áthat Primetime’s share price has drifted lower in recent months in line with the rest of the market but that sales of Primetime shares have been “minimal” and that the price possibly reflects sales by smaller holders of the unit that may be facing liquidity problems.

“In the light of a 7.5 thebe per linked unit distribution being paid out towards the end of May, the unit appears to be a sound buy at present,” he ┬árecommended.

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