Turnstar registers strong rental growth
Pauline Dikuelo | Monday May 18, 2015 15:40
Turnstar Managing Director Gulaam Abdoola told a media briefing recently that they have positive rental income growth supported by strong underlying and lease escalation.
Total rental income from Botswana portfolio increased by 3.2 percent on a like-for-like basis while the Tanzania portfolio increased by 9.1 percent.
“We have a healthy lease expiry profile as currently Turnstar has about 2.7 percent vacant space while about 0.9 percent is under negotiation and about 54 percent of leases are expiring in 2018 and beyond.”
Abdoola said that this is due to the fact that they engage in lease negotiations with their clients about six months before the actual expiry date.
“Our lease renewal cycle is every three years and most of our smaller tenants’ leases expire after 10 years. About 68 percent of our tenants are large national companies such as Game which we are currently in negotiations with them about their lease renewal.” About 67 percent of their space is occupied by retail, 16 percent by offices in Tanzania, nine percent by offices in Botswana, six percent by residential while the remaining one percent is occupied by light industrial. Meanwhile Turnstar is developing phase four of Game City shopping centre to include additional retail space, which will have a fashion avenue, restaurant area with a food court, entertainment area and a parkade.
“We realised that Game city mall lacked a night life compared to other malls in Gaborone and we realised that adding this would also be good for the business. I can tell you that about 80 percent of the additional space is pre-let.”
Further Abdoola said that there is an attractive growth prospect supported by strong underlying contractual cash flows, escalations above long-term inflation expectations and ongoing accretive expansion taking place.
“We are currently accessing the market for more possible expansion areas and we have already identified some place that are positioned for growth.”
Abdoola said that the property sector fundamental remains challenging specifically for old CBD office stock and the community shopping centre format while super regional and regional retail centres continues to perform well.
“There are additional retail and office developments in Gaborone, and increased foreign interest in the Botswana property sector.”
Turnstar’s strategy remains to invest in quality properties with strong contractual cash flows in order to achieve value enhancement and sustainable growth in distributions to unit holders.