PrimeTime cools on Zambian opportunities
Mbongeni Mguni | Friday December 6, 2019 16:10
PrimeTime, listed on the Botswana Stock Exchange, has office, retail and industrial buildings in Botswana, South Africa and Zambia with a market value of more than P1.4 billion.
The group entered Zambia in 2013 in its first regional expansion at a time when the domestic economy was experiencing a slowdown.
On Tuesday, however, PrimeTime asset manager, Joe Simpson told analysts and journalists that the performance of the Zambian assets had contributed to a negative fair value assessment that reflected on the full year results.
PrimeTime’s pretax profits fell 54% to P61.4 million for the year ended August 31, 2019 largely due to a fair value adjustment that moved from a positive P74 million in the 2018 financial year to a negative P14.1 million this year. “The negative fair value adjustment was primarily from Zambia,” Simpson said.
“The economic environment there has been challenging and whilst filling up our properties, we took some low rentals. In the long term we will have a steadier income.”
Zambia was also plagued by power supply shortfalls due to the lower levels of the Kariba Dam where the country has a hydroelectric power station.
The country accounts for a third of PrimeTime’s revenues. But the properties there suffered high vacancies as a result of the economic troubles in that country.
Zambia does not feature high on PrimeTime’s expansion plans as well, with executives explaining that the focus would be on ongoing projects in Botswana and upcoming acquisitions in South Africa. PrimeTime is planning to raise funding via debt and equity next year to finance its investment pipeline. “We are cautious on Zambia but at the same time, we are not ruling out doing anything else there,” Simpson said.
“If we had an opportunity to do a new bank headquarters and get a new 10 year lease from a grade A covenant tenant we would seriously consider doing that, but I don’t think we would be too bullish going off and searhcing for any mall in far flung location.
“We have looked over a number of jurisdictions over the past few years. “We looked at Namibia a few years ago and it was expensive. It was the right decision because we are now being offered properties there now at much cheaper rates.” The asset manager added that a second acquisition was being progressed in South Africa, after its first venture there through the Riverside Junction deal earlier this year. More developments are also underway locally such as Pinnacle Park in Setlhoa and Prime Plaza II in Gaborone’s CBD.