Pendergardens Developments plc expects profits to continue declining as the number of units that remain for sale in its landmark St Julian’s development dwindles. 

In its updated Financial Analysis, posted to the Malta Stock Exchange, the publicly listed Company says that revenues for 2021 are expected to continue falling to €8.7 million, down from €12.8 million the year 2020 and €22.1 million the year prior.

The drop in revenue reflects the nature of the Company’s business as a property development company, which is now primarily involved in marketing the remaining residential units within Tower Residences for sale, and marketing for sale or lease the retail and office space located in Block 16, Block 17 and Pendergardens Tower.

Two residential units were sold in January 2021, and the Company assumes that a further five residential units presently subject to promise of sale agreements will be converted to sales.

As such, the remaining stock of residential units at the end of 2021 is projected to comprise three apartments and one penthouse.

The management also expects to complete the sale of a number of car spaces to Valyou Supermarket, while the projections also include circa €1.5 million of rental income and car park revenues.

Depreciation is projected to remain broadly unchanged at €354,000 while finance costs are expected to decrease by 22 per cent from €2 million in 2020 to €1.6 million.

Profit after tax is expected to decrease from €1.1 million in 2020 to €194,000.

The actual revenue in 2020 was also lower than expected by €1.4 million, primarily due to the postponement of two promise of sale agreements to 2021.

Meanwhile, the Company reported a slower uptake of commercial spaces due to COVID-19, coupled with rent rebates granted to existing tenants during the partial lockdown. The operations of the public car park were similarly impacted by COVID-19 restrictions.

Block 16 comprises 46 apartments, four levels of underlying car spaces and circa 807m2 of retail area. The deed for the last remaining three-bedroom duplex penthouse unit in Block 16 with two car spaces was signed in May 2019 for the consideration of €1.1 million.

Block 17 and Pendergardens Tower comprise four levels of car park spaces below ground level, and two levels above ground of retail and office space all together totalling circa 15,000m2 .

As from Level 2, Block 17 includes seven floors of residential units and Pendergardens Tower comprises seven levels of office space (lettable area of circa 5,200m2) (known as Pendergardens Business Centre) and a further eight levels of residential units (known as Pendergardens Tower Residences). The top two floors of the Pendergardens Tower Residences have been developed into two duplex penthouses.

The offices and residences at Pendergardens Tower have separate entrances, lobbies and lifts. The last remaining three residential units within Block 17 together with three car spaces were sold in January 2020 for the aggregate value of €2.14 million. Development works relating to Pendergardens Tower were completed in May 2020.

Business Development Strategy

Public Car Park

The public car park was opened in February 2018 with 253 car spaces. In May 2018, the Company acquired an additional 3,548m2 in the public car park from its parent company, increasing the available car spaces to just over 320.

The operations of the public car park were strongly impacted by COVID-19 restrictions since entertainment venues in the area were on lockdown for several weeks in 2020. Besides, demand for parking space during office hours also experienced a downturn due to remote working. Nonetheless, overall occupancy and financial results showed an improvement over 2019, reflecting the Company’s commitment to remain competitive and improve occupancy levels.

Pendergardens Tower Residences

Pendergardens Tower Residences comprises 28 three-bedroom residential units and two three-bedroom duplex penthouses each having an outdoor pool and sky terraces. During 2019, nine residential units and a penthouse together with 11 car spaces were sold for a total consideration of €13.9 million. In 2020, a further nine residential units and 10 car spaces were sold for €9.2 million.

As at 31st December 2020, 4 residential units valued at circa €3.7 million (including associated car spaces) were subject to preliminary sale agreements. Remaining stock for sale at year end included 6 residential units and 1 penthouse.

The pricing strategy for the Pendergardens Tower Residences has been devised to target the higher end of the market, and factors the level of finishing that is significantly superior to other parts of the development, and which is reflective of market expectations for such apartments.

Commercial

Commercial property situated at Pendergardens comprises a total gross area of circa 16,400m2 (consisting of a retail podium under Blocks 16 and 17 and Pendergardens Business Centre). Other than the supermarket and the adjacent three retail units sold in 2017, both the office and retail areas of Block 16, Block 17 and Pendergardens Business Centre are available on the market for sale or lease.

As of 31st December 2020, seven lease agreements have been signed.

Four agreements are for retail units, three within Block 16 and one within Pendergardens Tower. Three other agreements are in respect of five floors out of the seven office floors available within Pendergardens Business Centre.

The Company has intensified its efforts to lease the remaining office and retail areas.