Home » Industry » Bus Interchange Project Set for Next Year

Listed company Pearl Properties said almost half of the required $50 million investment for a bus interchange complex construction in Harare will be raised through debt while the remainder will come from company operations.

Pearl Properties general manager for development Mr Christopher Manyowa said the company signed a joint venture agreement with City of Harare last year for the development of the bus interchange and the project is scheduled to take off next year.

The joint venture will see City of Harare contribute land while Pearl Properties will contribute funding for the development.

“In the medium term, the group will continue seeking innovative solutions to expand the revenue base and the joint venture will see the two parties developing a bus interchange complex along the lines of the South African model of Johannesburg Park Station at Fourth Street.

“The project is capital intensive and we are going to raise part of the money from operations and another part from borrowing,” Mr Manyowa said.

“The group will also be looking to conclude property portfolio expansion initiatives through direct ownership and through strategic partnerships.”

Mr Manyowa said the challenging economic environment and subdued demand for space restricted growth in the property market.

The company’s revenue for the year to 31 December 2014 went down about three percent to $8,7 million from $9 million recorded during the same period the previous year .

Profit for the year went down to $3,5 million from $9,8 million recorded the previous year.

Operating profit before tax and fair value adjustment declined 23,57 percent to $3,5 million from $4,6 million of 2013 due to the staff rationalisation exercise that resulted in a once off retrenchment cost of $0,216 million .

“Furthermore the effect of the external borrowing by the group to fund the acquisition of the remainder of Lot 57, Mt Pleasant as reported in 2013 resulted in finance costs of $0,643 million being incurred in 2014.

“The group will continue to explore opportunities to enhance internal efficiencies and devise cost containment measures to improve operating profit margins,” Pearl properties managing director Mr Francis Nyambiri said.

Rental income for the year declined 3,4 percent to $8,7 million from about $9 million of the previous year driven by a downward movement of the average rental per square metre to an average of $7,57 from $8,88 .

Mr Nyambiri said rental yield eased to 7,50 percent from 7,80 percent reflective of the decline in rental income.

Property expenses excluding provision for credit losses increased 16 percent to about $1 million from $0,950 million of the previous year driven by expenses relating to vacant space.

Provision for credit losses expenses increased to $1,2 million from $0,0733 million of 2013 reflecting the increasing tenant default rate.

Mr Nyambiri said the occupancy level for the period increased 4,7 percent to 79,93 percent compared to 76,30 percent of the previous year driven by lettings in the industrial sector, where space was converted and marketed for retail warehousing use.

Tenants arrears for the period grew to $2,93 million from $1,7 million in the previous year due to the liquidity challenges faced by tenants.

He said the company’s Kamfinsa cluster housing development comprising 38 units is largely complete and the group targets to dispose the units this year.

Source : The Herald