LISTED property company Pearl Properties (Pearl) will continue to clean up its book to manage arrears that have forced the company to write off US$1,1 million, management said.
In a trading update at the company’s annual general meeting on Tuesday, Pearl MD Francis Nyambiri said arrears as at April 2014 stood at US$2,1 million from a December 2013 position of US$$1, 7 million.
Nyambiri said the company had to write off US$1,1 million, leaving the arrears at around US$1,1 million.
“US$1,1 million has already been provided for as at 2013 position so the remaining arrears are US$1,1 million,” Nyambiri said.
Nyambiri said cleaning up the book would ensure arrears are kept in check going forward.
“Most of these arrears we have written off do not necessarily reflect sitting tenants,” he said.
“Like I said once we have provided for arrears we believe are difficult to recover, we believe they won’t be a huge swing upwards as we clean up the book.”
In terms of revenues, Nyambiri said they stood at US$3 million, 1% below budget and within the 2013 position.
Property expenses increased by US$171 000 to US$634 000 from prior year due to arrears while administration expenses were within budget at US$988 000 and have declined by US$300 000 from privious year, Nyambiri said.
Total collections for the four months amounted to US$2,7 million.
Occupancy levels went up 0,74% to 79,45% from 76,3% at the end of December 2013.
The rental yield went down by 4,3% to 7,56% as at April 2014 from 7,9% as at April 2013.
Rental per square metre also slid by 4,99% to US$7,61 from US$8,01 in the same period last year.
Property expenses to revenue stood at 21,19%, up 40,33% on the previous comparative period.
Arrears, compared to the same period last year went up by 31,4%.
Pearl is currently focusing on developing about 24 hectares of prime land which it acquired from a private company in Mt Pleasant at a cost of US$9,6 million. The land was rezoned by city council to commercial.
Pearl in April said it plans to develop housing units, a shopping complex and medical facilities.
The company said development would be done in phases with the first phase expected to gobble as much as US$60 million.
“The beauty is that because of the mixed land use we can do the shopping mall first or medical facility and cluster homes first,” said Nyambiri during the company’s annual results presentation for the year ended December 31, 2013.
“The project will be funded through a combination of internal funding and external borrowings,” he said.