PrimeTime Eyes Africa

| Monday December 15, 2008 00:00

 

'The South African market is well known to us and, with the pula being linked closely to the rand, is worth consideration for Botswana investors,' the company's Chairman Tshipa Mothibatsela, said last week.

'The current weak state of the property market due to the recent substantial rise in interest rates may well present good opportunities.' PrimeTime, however, notes that although some prospects have been identified, the acquisition of Botswana properties continues to be very difficult as most owners are not willing to sell.

The company says it will actively seek prime properties to acquire in the year ahead, but emphasizes that in making a purchase, it will not compromise on the quality for the sake of growth.

Meanwhile, the property company has put in an excellent performance since listing on the BSE in December last year. Unitholder distribution is 12.9 percent higher than expected and could improve in the coming year, the company says.In its annual report released in Gaborone last week, PrimeTime says the portfolio of commercial and office properties has been revalued at P236 million - up P12 million (5.5 percent) from the value at the time of the listing.

This is noted as being a particularly positive reflection on the quality of the properties and management of the company's assets, especially as the effective trading period for the portfolio is only eight months and only four months for properties purchased in Francistown.

Last month, the company announced a total distribution of 9.07thebe per linked unit which was paid out during the year. The unitholders received 4.36thebe in May and 4.71thebe to those that registered on November 21, 2008. On an annualised basis, this equates to 14. 23thebe per unit.

The company raised P100 million from a private and institutional placing on debut on the BSE and P7 million from a public offer which attracted an over-subscription of P17 million from 1 337 shareholders.The funds raised enabled the company to acquire the initial portfolio of 13 prime properties in major cities and towns across the country and three prime commercial properties from Tati Company in Francistown for P75 million.

PrimeTime's portfolio is well spread across the country with the major concentration in Gaborone and Francistown, but with a presence in other major centres. Risk is well spread across commercial, office and retail rentals with the largest single tenant, the South African High Commission, accounting for only 6.5 percent of total rental income.
Stockbrokers Botswana's CEO, Geoffrey Bakwena, says the company is structured and well placed to face any possible downturn in the local economy. 

'The company has a first-class portfolio of some of the finest properties in Botswana occupied by solid, blue chip tenants and the company's management has proved itself over the years in the buildup to the listing and during 2008,' Bakwena says. Looking to the future, the company warns of the possibility of a significant downturn in local markets, especially in the mining industry.

'Botswana will be severely affected when the demand for diamonds reduces over the next few years until the global recession abates' but 'we are observing the market and taking all due care to protect the company,' it says.

This downturn could impact on disposable income and general business activity which could put PrimeTime's tenants under pressure, but the government's policy to prevent a boom/bust scenario through its intended capital development programme should provide a buffer locally to the downward cycle.

However, the company says if the economy is severely affected, it will not come under any danger of pressure from debt as the company has enough cash to survive.