Property giant, Turnstar Holdings Limited has reported a decline if rental income as the Game City mall owners went through a number of challenges during the year.
First, there was a delay in completion of the construction of the new section of the Game City mall, and in addition, government did not issue trading licenses to the prospective tenants who had signed pre-leases. “These issues delayed the leasing of the new wing of Game City. However, majority of the premises have now been rented and rental revenues have been received during the last few months of the financial year under review,” the company said.
Turnstar’s challenges were not only limited to Botswana market, with the group also operating in Tanzania, it is reported that there was a delay as well over there in the completion of the construction of Mlimani City, resulting in a delay in leasing of the new developments. The group’s challenges there were exacerbated by the current economic downturn there which has affected the Milimani Commercial Office and Conference Centre revenues.
During the year ended 31 January, 2018, Turnstar’s rental income was P251.9 million, from P254.6 million during the same period last year. The company’s profit after tax decreased significantly, from P237.7 million during the same period in 2017, to P73.2 million during the year under review.
However, there is turn in fortunes now as the company says it has started receiving leasing inquiries and the commercial offices have commenced tenanting.
Pending the leasing, Turnstar had to incur overheads such as utilities, security, cleaning and others.
On top, the company had to incur interest expenses on the completed construction project and the delayed income from the newly completed areas is said to have affected the group’s operating profit. The other factor that negatively affected Turnstar results is the US Dollar depreciation against the Botswana Pula. Turnstar has however reminded its stakeholders that the foreign exchange translation gains and losses are unrealized and dependent on US$/BWP exchange rate as at year end.
Further, the group which is led Gulaam Abdoola has said that it has ensured that, the US Dollar denominated liabilities are serviced by US Dollar income, and hence the group is not exposed to actual exchange fluctuations.
The translation loss for the year ended 31 January, 2018, occurred when translating the US Dollar denominated investments and other financial assets of the group’s Tanzanian subsidiary, Mlimani Holdings Limited.
The subsidiary reports in US Dollar currency; whilst the group’s functional currency is Botswana Pula. On other matters, Turnstar has announced the successful acquisition of an office block in Dubai. The acquisition, the group says, provides it with further diversification in terms of geographic location as well as currency hedge. The block was acquired through the group’s internally generated funds and it is currently fully tenanted as from the date of purchase and provides a yield of 9 percent per annum.
The property was purchased during the latter part of the financial year, hence only a few months revenue is reflected in the current financial period.