Thursday, September 24, 2020

Turnstar results blighted by acquisitions

Turnstar Holdings, the largest property development company on the stock exchange, brightened the faces of shareholders by posting a marginal P 2.9million net profit increase in its half year results largely affected by acquisitions.

The net profit for the six months, which ended April 30, indicated that the group had made an improvement of 9.36 per cent as compared to the 4.7 per cent gained during a comparable period in the previous year.

The company hit headlines last year when it acquired Borolong Shoe Wholesalers and properties from Bifm at the tune of P165 million.

The group’s revenues increased to P31.0m driven by additional rental income from the expanded property portfolio and improved occupancies. Administrative expenses comprised of letting fees, advertising, property maintenance and other administration cost rose to P10.2 million.

The ground rent charge for Game City of 10% of gross rents received net of operating expenses represents a large portion of expenditure while the bulk of the increase from first half of 2005 was due to property management fees.
With the acquisition, Turnstar has the largest domestic property portfolio valued at P378.8m.

The significant rise in short-term payables to P73 million was on account of the delayed registration of Fairgrounds Office Park (FOP) to Turnstar and the subsequent transfer of the 73, 549, and 546 linked units to BIFM because of zoning issues. The problem was recently resolved with FOP and the adjacent land subdivided. An interim dividend of 0.08t and interest of 4.02t was declared payable on 22 August 2006 and the directors announced as intention to declare a special interim dividend and interest in respect of income from FOP.

“For the full year 2006 (FY 2006,) we forecast EPLU (including debenture interest) of 9.5t and a total gross distribution of 9.4t. Our forecasts are dampened by the dilutive effect of the issued linked units for the property acquisitions,” said the report.
Nonetheless, the deal was a good one for Turnstar as it gives the property stock some substance and diversity. Hence the group went from being a single property stock to a well diversified and reasonably geared portfolio stock with the bulk of the properties acquired debt free,” Stockbrokers Botswana said.

The BIFM portfolio included eight properties in the commercial, industrial and residential sector of Gaborone for P121.8 million worth of new linked units while the Borolong deal was for the acquisition of the Nzano retail complex in Francistown for P42.5 million worth of linked units. Amongst others Turnstar contracted Khumo Property Managers, a new jointly owned company (BIFM and Rand Merchant Bank Properties of South Africa each hold 50%) to manage the entire property portfolio on a professional basis charging market related fees.
“Going forward, our medium term outlook for consumer spending is cautiously optimistic underpinned by moderating inflationary pressure, the 8% civil service wage increase, progressive tax reforms, and increased government spending. Provisional terms have been agreed with tenants in respect of the vacancies at Game City which should see the retail centre fully let-out shortly,” said statement.

Game City, the largest and busiest modern shopping center in Botswana, remains the company’s main asset with approximately 50,000 square meters of gross area and 41,000 square meters of let-table area.

The domestic property market review for the trading period was a mixed bag of fortunes across the five major sectors as high inflationary pressure weight on consumers.

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