‘Smart Residencies’ gets Agusto & Co’s Bbb Rating

To better appreciate the prudent management of the real estate company, in its the financial year which ended on December 31, 2021, it posted revenue of ₦474.1 million

A globally renowned credit rating agency Agusto & Co has assigned a “Bbb-” rating to Smart Residences Limited, owners of a popular luxury serviced apartments, Gidanka.

The rating comes barely three years since the company came into existence, signalling SRL’s “satisfactory  profitability and cash flow levels which are supported by the steady growth in the company’s operating capacity since its inception,” according to the report by Agusto & Co.

“This is in addition to SRL’s adequate working capital and low leverage position in the period under review.”

Smart Residences which is based in Abuja started it’s unique hospitality and real estate offering at the on-set of the COVID-19 pandemic in 2020.

Agusto & Co in its report revealed that although the company started business at a difficult global health emergency period with 30 apartments, but because of innovation and prudent management quickly doubled the same within the first two years of operations.

To better appreciate the prudent management of the real estate company, in its the financial year which ended on December 31, 2021, it posted revenue of ₦474.1 million, a positive increase from ₦120 million in the previous year on account of the launch of additional 30 apartments and the price increases implemented in the period.

Furthermore, Smart Residences’s operating expenditure to revenue ratio of 59.8 per cent in 2021 amid the positive impact of economies of scale, thus resulting in a much-improved operating profit margin of 30.7 per cent in full year 2021, compared to the five percent recorded in its first year of operation.

The rating agency noted that, “we expect the company’s debt profile to rise over the medium term based on management’s plans to inject debt funding into its capital structure.

“Going forward, Smart Residences plans to establish new apartments in carefully selected neighbourhoods to leverage the rising demand for luxury short-let apartments in Abuja with plans to expand to Kano and Lagos over the medium term.

“In addition, Smart Residences intends to widen its portfolio with the establishment of food and beverage retail outlets to meet customers’ demand as well as diversify its revenue stream from rental income.

“We expect the successful actualisation of these initiatives to potentially enhance the company’s earnings over the near to medium term. However, our expectation is hinged on steady patronages across the company’s apartments, barring unprecedented events that may disrupt the operations of the emerging flexible accommodation services in Nigeria.”

At the helm of the company is a serial entrepreneur Mr Olajide Abiola as Managing Director/CEO. He and his team ensured that profit rose within a short period. This has necessitated plans to expand services to other cities in the country.

The rating agency also noted that SRL has “no interest-bearing obligations as at FYE 2021. As such, the Company’s leverage metric – net debt (total liabilities less cash and equivalent) to total assets of 20% as at FYE 2021 and 12% as at 31 March 2022 (unaudited) were both better than our benchmarks.

“Therefore, we attach a stable outlook to Smart Residences Limited.”

Apart from Gidanka, the company also operates through another trademark – “Home-away” and are associated with two apartments: The Residence and The Glass Residence, both of which are located in Abuja.

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