Most small and medium size offices rent residential properties for purposes of their business and hence the demand for office buildings "is rather lukewarm," a quoted property developer and building operator has told shareholders.
"This has impacted the demand for office buildings and it is hoped that the relevant statutory authorities will look into this matter," Mr. A. Rajaratnam, Chairman of the York Arcade Holdings PLC, owners of commercial space in Colombo Fort has told shareholders in the company’s annual report.
However, he said their company was hopeful that the demand for office space will improve over the next few years.
Despite these comments, Rajaratnam said that the present level of occupancy of their Fort commercial building is ``considered satisfactory’’ although the average lease rental will have to be improved in order to meet the increased cost of electricity, water and other overheads.
He also said they were conscious that the buildings they own are over 25 years old and would require complete renovation in the near future to bring their property in line with most other modern commercial buildings in the city.
York Arcade Holdings described themselves as ``real estate developers as approved by the Urban Development Authority.’’
The year ended March 31, 2012 saw the company posting revenue of Rs.43.2 million, up from Rs.35.5 million a year earlier and a profit after-tax of Rs.16.9 million (Rs.1.41 per share) against Rs.14 million (Rs.1.17 per share) earned a year earlier.
The company has a stated capital of Rs.14.4 million, a property development reserve of Rs.10 million and retained earnings of Rs.93.2 million in its books.
Total assets were running at Rs.159.7 million and total liabilities at Rs.42.1 million.
York Arcade is a member of the Colombo Fort Land & Buildings group of companies with Colombo Fort owning 49.27% of York Arcade equity with other group members, Colombo Investments (1.94%) and Colombo Investment Trust (1.48%) being among other major shareholders.
Net assets per share during the year stood at Rs.9.80, up from Rs.8.69 the previous year and the company’s share traded at a high of Rs.43 and a low of Rs.14 during the year. This compared to a trading range of Rs.47.90 to Rs.12.50 the previous year.
Profit for the year under review had been a ten-year high.
The directors of the company are: Messrs. A. Rajaratnam (Chairman), S.D.R. Arudpragasam, T. Theyagmurti, S. Shanmugalingam and A.M. de S. Jayaratne.