Turnstar holdings, one of Botswana’s listed property developers is experiencing a major blow in its revenue following the delayed incomes from the newly completed Game City Gaborone and Mlimani Tanzania project extensions.
The group chaired by Patrick Balopi whilst steered by Gulaam Abdoola as the Managing Director has this week cautioned its shareholders that the group’s results for the year ended 31st January 2018 to be lower than the prior period (2017).
For the year ended 31st January 2017, the groups’ revenue was also on the downturn as it decreased by 2 percent to P 123.9million due to the sale of the Fairground Office Park property and displacing of tenants during construction.
The statement by the Turnstar Board this Monday reveals that there was a delay in the completion of the construction of the new section of the Game City mall. “In addition, the government did not issue trading license to the prospective tenants who had signed pre-leases. These issues delayed the leasing of the new wing of Game City. However, the majority of the premises have now been rented and rentals revenues have been received during the last few months of the financial year under review,” Balopi explained to shareholders in his statement.
On the other hand, in Tanzania, the delay in the completion of the construction of the Mlimani also resulted in a delay in the leasing of the new developments. The current downturn in the economy has also affected the Mlimani commercial office and conference centre revenues. However, it is understood that leasing inquiries are now being received and the commercial offices have commenced tenanting.
Moreover to the above mentioned pending the leasing, the group had to incur overheads such as utilities, security, cleaning amongst others. The interest charges on the completed construction project, has to be incurred as well.
Meanwhile, the US dollar depreciated against the Pula significantly, during the year ended 31st January 2018. This has adversely affected the group results for the year ended 31st January 2018. Stakeholders are however, reminded that foreign exchange translation gains and losses are unrealized and dependant on the US$/BWP exchange rate as at year end. Further, the group has ensured that, the US dominated liabilities are serviced by US dollar income, and hence the group is not exposed to actual exchange fluctuations.
According to the group, these aforementioned have affected the group operating profits.
In May 2017, Turnstar acquired its first office building in Dubai. Situated in the heart of Majan, a prime location between Al- Basari and Dubai Legends, with the City of Arabia exactly opposite, it is in a freehold area, allowing 100 percent ownership for expatriate companies. The building is a ground plus four story building, with the ground floor comprising of 3 retail units and the 4 upper floors comprising 8 commercial units. The building is fully leased out, to one tenant, on a long term basis.
Turnstar stock closed the year trading at P3,29 and later reached its high early in February 2018 trading at P3,30. The stock continues to go on its lower each month and has knocked down to P3,22.
