The Botswana Stock Exchange (BSE) diversified real estate development and asset management company Far Property has reported 10% rental revenue growth in the year 2024. Far Property overcame tough macroeconomic conditions and posted solid performance across various portfolios throughout the year.
The property giant indicated in its 2024 Annual Report that it has demonstrated agility in rapidly adapting its thinking and operations in response to changes in consumer needs.It also noted that the profit before income tax also grew by 10%. Reetsang Willie Mokgatlhe, Far Property Independent non-executive chairman, said the Group delivered another set of impressive results, reporting profit before tax 27% higher than the previous year. He said this was due to rental revenue increasing by 10% and the vacancy rate of the portfolio remaining below 6%.
“A strong and steady rental revenue from Grade A tenants contributed a significant change in the open market value of the portfolio,” he said.
He said the property portfolio increased 10% due to acquisitions, ending the year with an overall open market value of the investment property of P1.62 billion compared to P1.47 billion at 30 June 2023.
Furthermore, he said the Group has a well-balanced and diversified portfolio comprising 53% commercial/retail, 40% industrial and warehousing and 7% residential properties.
“We boast an impressive tenant mix with 78% Grade A tenants consisting of premium tenants and 19% medium sized businesses with well-established business operations as well as 3% new start-up companies,’’ Mokgatlhe buttressed.
Furthermore, the Far Property Board chair said there are currently four major projects ongoing, including the distribution centre project in the Lusaka Economic Freezone, which indicates the company’s commitment to expanding in these new markets.
He stated that their loans-to-equity ratio is in a healthy state and they continue to prudently manage cash to ensure that debt payments are made as they fall due.
“We continue to be competitive when compared to our peers, and with our current land bank, we will continue to be competitive well into the foreseeable future while sustainably growing our portfolio,” he said.
Meanwhile, the Far Property Executive Director Vidya Sanooj said the Group continued to demonstrate a preference for development over acquisitions during the year.
She said six developments are currently being built in Botswana and Zambia, adding that the occupancy rate in Botswana is currently at about 96%, whereas South Africa is in the recovery stage, and they are in advanced negotiations to relet the space.
Delving into their strategic direction, Sanooj said Far Property’s vision is to have the best-balanced portfolio in the region (excluding Zimbabwe).
“We believe that in Botswana we already have a land bank to deliver this while in Zambia we have already embarked on a journey to establish a sufficient land bank. Our focus is on smaller business centres where there is minimal risk of a single tenant and we continue to seek to diversify,” she buttressed.
According to Sanooj, residential remains a non-core sector and they intend exiting from the market as soon as the opportunity arises. She said all of Far Property leases are triple net leases, which limit their landlord responsibilities to only structural maintenance. Sanooj also said in order to provide long-term stability, lease renewals are typically for five years with a further five-year option.
“Supported by our strong NAV we plan to develop our land bank over the next few years which will position us for our next growth phase.
The land bank is currently between 5% and 10% of the total portfolio,” she said