Rent hikes help triple BHC’s profits
Pauline Dikuelo | Monday December 20, 2021 06:00
The BHC posted pretax profits of P23.2 million, with rental adjustments made earlier in the year boosting rental income from P17 million to P121 million.
Earlier this year, the corporation increased its rentals in a move it said was aimed at meeting the market rates. When complete, the phased revision, which started in April, will see a low cost, which ranged at about P537 in rental, go up to P2,050 per month, a medium cost from P1,330 to P3,700 per month, high cost from P2,162 to P5,020 per month, town houses from P1,886 to P5,020 and flats from P1,238 to P3,500.
The improved rental income papered over a drop in the BHC’s mainline revenue of house sales, which fell to P74 million in the half year to September 2021, compared to P90 million last year. The higher rental income also came against an increase in rental defaults, particularly from individual customers, with BHC directors saying strategies had been put in place to help these customers.
Commenting on the results, BHC acting chief executive officer, Pascaline Sefawe, said the addition of housing units to the investment properties portfolio during the first half of the year had also added to the rental increase.
Last year government gave the corporation the green light to increase rentals after realising that the current rates did not make economic sense.
BHC’s results show that the performance in the half year was significantly helped by the reversal of a P17 million impairment with a tenant debtor.
“This significantly improved the corporation's performance for the six months. The impairment provision was occasioned by an impasse with one of our major customers, an issue which has now been resolved,” she said.
However, COVID-19 generally restrained the BHC’s performance, with Sefawe noting that government, which is its major customer, had reprioritised its resources towards fighting the pandemic.
“This negative performance was driven by the low sales volumes mainly as a result of the current economic situation of COVID-19. However, we have surpassed the sales target we had set for the six months due to the fast selling of Tsholofelo Apartments," she said.
The acting CEO said the corporation remained confident of positive results by the end of the financial year next March. Sefawe said the projected improvement in global and local economic growth was expected to help the BHC and the parastatal remained a “very resilient business”.