Caudan Development Ltd sees 5.9% drop in rental revenue
Caudan Development Ltd’s rental income fell by 5.9 per cent for the period ended June 30, 2013 and economic conditions are expected to remain difficult in 2014 (Image: The Beachfront Club)
Caudan Development Ltd, the Mauritius realty major looking after premier island waterfront property – Le Caudan Waterfront – has witnessed a decrease of 5.9 per cent in rental revenues for the year ended 30June13 compared to the year ago period.
Moreover, the latest audited financial statement notes that economic condition can be expected to remain difficult, resulting in a lack of confidence in the business sector and amongst consumers.
Jean-Pierre Montocchio, Chairman, Caudan Development Limited, mentioned in the annual report for 2013 that, for the year ended June 30, 2013, the gross rental income is estimated at Rs 232.4 million. Compared to the year-ago period, it has decreased by Rs 14.5 million, or 5.9 per cent, where the figure for last year stood at Rs 246.9 million.
However, although there was a decrease in the gross rental income, the profit before tax stood at Rs 52.3 million compared to Rs 52.6 million a year-ago. Additionally, factoring out the abnormal profit of Rs15.5m on the disposal of an investment in Tropical Paradise (TPCL) realized in 2012, the normal profits for 2012 stood at Rs 37.1 million.
Thus, underlying profit registered a 41 per cent increased in spite of the bleak economic conditions which prevailed throughout the year.
However, this increase, while impressive on the surface, is largely due to declining finance costs pursuant to the fall in interest rates, and partly due to a reduction in property operating expenses, which had spiked up last year due to higher maintenance expenses and 15th anniversary festivities.
The improved performance in the security segment has also contributed in the profitability of Caudan Development Ltd. The security segment realized a net income of Rs 6.9 million compared to Rs 4.3 million last year.
According to Montocchio, the retail market is a challenge as it continued to reflect an uncertain natural economy and straitened circumstances for many consumers, thus creating an adverse impact on retailer demand and resulting in falling rental values.
“To make matters worse, the traumatic flash flood of 30th March exacerbated an already precarious situation and impacted further on our footfall,” highlighted the chairman.
To improve on rental incomes, Caudan Development Ltd will work together with the retailers in order to look after profitable opportunities.
“We are aware that rental levels for retail space and offices remain under considerable pressure but we will do our utmost to achieve our immediate operating objectives to maximize occupancy and returns through proactive initiatives and to manage an even tighter control of costs,” stated Montocchio.
To attract more consumers, Caudan Development Ltd will expand the range of goods and services as well as upgrade cinemas.
The Chairman concluded by saying that the net operating rental income may decline according to the forecast for 2014, and demand will continue to be downcast until there is improvement in business and consumer confidence.