Botswana Stock Exchange listed property group Prime Time this week reported its financial results for the year ended 31 August 2024. Despite a challenging macro-economic environment - particularly in Zambia - impacting on tenant performance, the Group achieved significant progress in key strategic areas, including debt reduction, tenant retention and sustainable development.
"Despite the challenging macroeconomic environment, PrimeTime has demonstrated resilience and continued to make significant progress in executing our strategic priorities.While we acknowledge the external challenges faced, particularly in Zambia and South Africa, our unwavering focus on operational excellence, financial prudence, and strengthening of the balance sheet positions us well to deliver stakeholder value in the years ahead. We managed to deliver a solid set of results by focusing on the key deliverables under our control, such as improving revenue, tenant retention and the filling of vacancies, as well as amortising debt to reduce our LTV,” said Sandy Kelly, Managing Director of the company.
During the period under review, Prime Time reported a 7% increase in revenue to P227.0 million, alongside an impressive overall portfolio occupancy rate of 99.3%, up from 97.5% in the prior financial year. This reflects the Group’s commitment to maintaining a high-quality asset portfolio and a well-diversified tenant mix. Operating expenses, however, rose by 19% to P97.4 million, largely driven by increased property and maintenance costs, inflationary pressures, higher portfolio management fees and non-recurring expenditures, such as legal and consultancy fees related to corporate actions. The Group also faced rising costs from load shedding in Zambia, leading to a significant increase in unrecoverable service charges, resulting in P1.9 million in unrecovered expenses for the year. Notwithstanding improvements across most key metrics, profit from operations and consequently earnings per linked unit were adversely impacted by lower fair value adjustments in the Zambian and South African portfolios, mainly resulting from exchange rate fluctuations and subdued market conditions.
Profit before taxation decreased by 40% to P62.3 million (from P104.4 million in the prior financial year) and earnings per linked unit on a basic and diluted basis contracted to 17.28 thebe, largely as a result of lower fair value gains on property and higher operating expenses. “In Zambia, operational improvements are ongoing; however, funding and business costs - compounded by an electricity crisis and a doubling of interest rates over the past three years - have tempered short-term performance. “Tighter financial conditions necessitated increased provisioning to mitigate credit risk, whilst fair value gains in the Botswana portfolio were partially offset by valuation declines in Zambia and marginally in South Africa.
“Despite this, the Group remains focused on long-term growth by strengthening the balance sheet and maintaining consistent cash flows,” said Kelly. During the year under review, PrimeTime reduced its overall borrowings comprising long-term debt and bank overdraft facilities from P931.7 million in the prior year to P905.4 million. This was achieved through a P70.0 million debt amortisation from Funds from Operations and a successful P20.1 million capital raise allowing for an immediate reduction in the Botswana overdraft balance. The weighted average cost of debt improved from 8.14% to 7.8% at the year end, driven by debt restructuring and easing interest rates. Meanwhile, Prime Time successfully retained all major tenants, resulting in an occupancy rate of 99.3%, up from 97.5%. This strong performance reflects the quality of the Group’s assets and the strategic importance of tenant diversification and maintaining good landlord/tenant relationships.
The Motswere Building at Prime Plaza II, which achieved a 5-Green Star As Built rating, became operational in late 2023 and immediately achieved full occupancy. The Group’s focus on sustainability was further strengthened with the roll-out of solar energy solutions across some of its Zambian assets. “The Motswere Building exemplifies our vision of creating properties that deliver both exceptional value and a positive environmental impact. This project reflects our dedication to sustainable development as a core pillar of our growth strategy, in line with global best practice,” said Kelly. Building on this success, PrimeTime is advancing plans for the remaining phases of Prime Plaza II, with a focus on delivering high-quality, sustainable developments.
The Group’s prime landbank in Botswana remains a critical asset, offering significant potential for future developments in its core market and forming a key strategic focus for the medium term. To support sustainable growth and ensure long-term value creation, the Group is prioritising prudent debt-to-value management. This includes the selective disposal of properties and reinvestment into high-yielding assets aligned with its strategic goals. In line with this strategy, the Group has identified certain assets for potential disposal over the next three years, which we it is confident will realise good value in line with recent market transactions. Moreover, the Group has identified selected developments offering better long-term growth prospects to reinvest the capital raised into.
Looking forward, the company has announced that, it is focused on achieving sustainable growth through continued debt reduction, tenant retention, and strategic investments in sustainable developments. The Group remains optimistic about creating long-term value for shareholders despite short-term challenges. “As the Group’s revised strategic plan gains traction (the start of the financial year being inhibited by the potential corporate action), the Board and Management are confident that the Group will deliver increasing distribution yields and continue to maintain and grow the intrinsic value of its assets,” noted a statement.
‘The current financial year will see an ongoing emphasis on operational efficiency, sustainable practices, and selective investments, which will over the medium term position Prime Time as a leading player in the property market across Botswana and beyond’
"Despite the challenging macroeconomic environment, PrimeTime has demonstrated resilience and continued to make significant progress in executing our strategic priorities.While we acknowledge the external challenges faced, particularly in Zambia and South Africa, our unwavering focus on operational excellence, financial prudence, and strengthening of the balance sheet positions us well to deliver stakeholder value in the years ahead. We managed to deliver a solid set of results by focusing on the key deliverables under our control, such as improving revenue, tenant retention and the filling of vacancies, as well as amortising debt to reduce our LTV,” said Sandy Kelly, Managing Director of the company.
During the period under review, Prime Time reported a 7% increase in revenue to P227.0 million, alongside an impressive overall portfolio occupancy rate of 99.3%, up from 97.5% in the prior financial year. This reflects the Group’s commitment to maintaining a high-quality asset portfolio and a well-diversified tenant mix. Operating expenses, however, rose by 19% to P97.4 million, largely driven by increased property and maintenance costs, inflationary pressures, higher portfolio management fees and non-recurring expenditures, such as legal and consultancy fees related to corporate actions. The Group also faced rising costs from load shedding in Zambia, leading to a significant increase in unrecoverable service charges, resulting in P1.9 million in unrecovered expenses for the year. Notwithstanding improvements across most key metrics, profit from operations and consequently earnings per linked unit were adversely impacted by lower fair value adjustments in the Zambian and South African portfolios, mainly resulting from exchange rate fluctuations and subdued market conditions.
Profit before taxation decreased by 40% to P62.3 million (from P104.4 million in the prior financial year) and earnings per linked unit on a basic and diluted basis contracted to 17.28 thebe, largely as a result of lower fair value gains on property and higher operating expenses. “In Zambia, operational improvements are ongoing; however, funding and business costs - compounded by an electricity crisis and a doubling of interest rates over the past three years - have tempered short-term performance. “Tighter financial conditions necessitated increased provisioning to mitigate credit risk, whilst fair value gains in the Botswana portfolio were partially offset by valuation declines in Zambia and marginally in South Africa.
“Despite this, the Group remains focused on long-term growth by strengthening the balance sheet and maintaining consistent cash flows,” said Kelly. During the year under review, PrimeTime reduced its overall borrowings comprising long-term debt and bank overdraft facilities from P931.7 million in the prior year to P905.4 million. This was achieved through a P70.0 million debt amortisation from Funds from Operations and a successful P20.1 million capital raise allowing for an immediate reduction in the Botswana overdraft balance. The weighted average cost of debt improved from 8.14% to 7.8% at the year end, driven by debt restructuring and easing interest rates. Meanwhile, Prime Time successfully retained all major tenants, resulting in an occupancy rate of 99.3%, up from 97.5%. This strong performance reflects the quality of the Group’s assets and the strategic importance of tenant diversification and maintaining good landlord/tenant relationships.
The Motswere Building at Prime Plaza II, which achieved a 5-Green Star As Built rating, became operational in late 2023 and immediately achieved full occupancy. The Group’s focus on sustainability was further strengthened with the roll-out of solar energy solutions across some of its Zambian assets. “The Motswere Building exemplifies our vision of creating properties that deliver both exceptional value and a positive environmental impact. This project reflects our dedication to sustainable development as a core pillar of our growth strategy, in line with global best practice,” said Kelly. Building on this success, PrimeTime is advancing plans for the remaining phases of Prime Plaza II, with a focus on delivering high-quality, sustainable developments.
The Group’s prime landbank in Botswana remains a critical asset, offering significant potential for future developments in its core market and forming a key strategic focus for the medium term. To support sustainable growth and ensure long-term value creation, the Group is prioritising prudent debt-to-value management. This includes the selective disposal of properties and reinvestment into high-yielding assets aligned with its strategic goals. In line with this strategy, the Group has identified certain assets for potential disposal over the next three years, which we it is confident will realise good value in line with recent market transactions. Moreover, the Group has identified selected developments offering better long-term growth prospects to reinvest the capital raised into.
Looking forward, the company has announced that, it is focused on achieving sustainable growth through continued debt reduction, tenant retention, and strategic investments in sustainable developments. The Group remains optimistic about creating long-term value for shareholders despite short-term challenges. “As the Group’s revised strategic plan gains traction (the start of the financial year being inhibited by the potential corporate action), the Board and Management are confident that the Group will deliver increasing distribution yields and continue to maintain and grow the intrinsic value of its assets,” noted a statement.
‘The current financial year will see an ongoing emphasis on operational efficiency, sustainable practices, and selective investments, which will over the medium term position Prime Time as a leading player in the property market across Botswana and beyond’
