GM Properties' Review

Rennie Wekina General Manager Properties
Rennie Wekina
General Manager Properties

Credit House Limited

Credit House Limited produced a record performance in 2012 posting a net profit before tax of K7.6 million an increase of 28.6% over the 2011 result. This was primarily as a result of all tenant leases being renewed in the preceding two years and the building being fully tenanted throughout the year.

A revaluation of the property was carried out in October 2012 and there was a nominal increase of 2% on the book value of the building. When the capital expenditure on the major refurbishment of the building is taken into consideration, this demonstrates that the project was well worth undertaking and the costs were appropriately within the normal market appreciation of the property.

We note that with all the new commercial office stock in the market, rental rates will not see any significant increases in the medium term, although outgoings costs continue to remain high. This is largely as a result of the businesses that provide these services passing on the high core input costs.

We expect there will be some tenant movement in 2013/2014 and this will impact on the building’s performance. We are confident that having completed the major refurbishment of the building and with the high standard of service and security we provide, space in Credit House will remain an attractive option to new and existing corporate tenants wishing to be accommodated in a modern, functional and well serviced building.

Era Dorina Limited

Although rental rates in the executive residential market peaked in 2012, Era Dorina Estate has maintained full occupancy throughout the year and we have been able to maintain rental levels. Consequently, the property produced another record result, posting a net profit before tax (after property revaluation) of K18.94 million. This represents an increase of 8.5% on the 2011 result.

We also carried out the revaluation of Era Dorina Estate in October 2012 and the property was valued at K173.09 million which is an increase of 37% on the book value. This is a very good result and demonstrates strong asset appreciation since the last valuation in 2009.

Supply of executive residential accommodation in the market has been satisfied and we do not expect any movement in rental rates in the short to medium term. Despite that, the reputation Era Dorina Estate enjoys as a well serviced, family friendly, secure compound will ensure that we will continue to maintain high occupancy rates.

The construction of the Stage 5, twenty one-bedroom studio apartments is progressing well and we expect the apartment leases to start from November 2013. Although we have not yet commenced marketing, we have received encouraging feedback from various sectors of the market and we believe this will be another successful addition to the Era Dorina brand.

Ela Makana Developments Limited

We have purchased 0.7975 hectares of land at the crest of Ela Makana not far from Era Dorina Estate and with fantastic views towards both Ela Beach and Fairfax Harbour.

An overall master plan has been drafted for the site and development will be completed in stages, based on market demand. Concept designs and costings are currently underway to build an executive residential development on the site, which will compliment Era Dorina Estate.

We believe this is a good, strategic purchase and it will allow us to expand the portfolio in a controlled and responsive manner.

Rennie Wekina
General Manager Properties