Transfer tax concerns Prime Time property
Prime Time, one of the country’s largest property firm has bemoaned the negative impacts derived from Income Tax Amendment Act passed last year. Managing Director, Sandy Kelly said the new legislation combined with the proposed changes to Property Transfer Tax is likely to undermine foreign investor confidence.
“In the bigger picture, we cannot talk about the Group’s future prospects without highlighting the effect on our investors of the recently introduced Income Tax Amendment Act 2018.“As advised in the recent interest payment announcement made in February 2019, this Act limits the deduction of net interest expense in calculating taxable income and will result in the Company suffering income tax on its profits prior to their distribution as debenture interest,” said Kelly. He said the Act that was passed in December 2018, retrospectively affects PrimeTime’s current financial period commencing 1 September 2018, as no transitional provisions for its implementation have been imparted.
“We are working with our peers at the other listed property counters and organisations representing the business community to engage government in finding a long-term workable solution to the sudden implementation of the Income Tax Amendment Act 2018,” said Kelly, adding that his Board is currently assessing available options to protect the unitholders’ interests. Kelly said PrimeTime has recorded a positive first half to the company’s 2018/19 financial year as revenues increased, propped up by income from projects delivered during the previous financial year.
“We opened two malls in Zambia in 2018, Chirundu on the border with Zimbabwe, and Munali Mall in Lusaka, as well as the Design Quarter at Setlhoa in Gaborone. “The contribution from these properties to PrimeTime’s income line in the previous financial year was limited, with only Chirundu effectively income generating for a portion of the period,” said Kelly.
He said the three properties are now getting close to full occupation and have contributed to the 19 percent increase in income recorded in the first half of the current financial year. In addition, the reduction in the vacancy rate across the portfolio from five percent to three percent also boosted income for the company. “We had anticipated a fall in vacancies since so much new space was delivered close to the last year-end and new developments typically take a little time to begin running at full capacity.” PrimeTime expect the vacancy rate to reduce further in the coming months.
Meanwhile, the company is taking steps to protect the value of its assets which comprise 22 properties in Botswana and six in Zambia.Kelly said this year’s major refurbishment and maintenance plans are completion of the Pilane Crossing extension which is well underway and 50 percent let. The road widening project in Setlhoa is complete, improving the accessibility of both Sebele Centre and the Design Quarter. “Agreement has been reached at both Boiteko Junction in Serowe and our retail centre in Ghanzi for a ground lease extension and acquisition of the freehold respectively. Both are in the lawyers’ hands and are scheduled to complete in time,” said Kelly.
PrimeTime is also working to continue its upward growth trajectory. “In Botswana the first phase of the Pinnacle Park Office development in Setlhoa is underway and will complete in March 2020. We continually assess investment opportunities within and outside our existing geographical bases and expect to make investments in the very near future as we strive to grow and diversify the portfolio to protect our unitholders’ interests and deliver long-term wealth creation.”