Claims even some at Independence Arcade not paying rent
By Chandeepa Wettasinghe
A significant portion of clients of the Urban Development Authority (UDA) have not been paying their rent this year by leveraging the ongoing political uncertainty, a top UDA official said.
“We have around 3,000 clients and most of them are not paying their rent now. Some haven’t since January. They’re taking the upper hand from the current political uncertainty,” UDA Finance Deputy Director General Priya Jayawardene told Mirror Business.
He noted that some clients say “it’s our government” and don’t pay rent, while the others chase away public officials in a profane manner.
“Even some at the Independence Arcade, they aren’t paying rent. Earlier we used to go there, seal the shops and force them to pay our rent, but now, we can’t do it. We don’t want to force them anymore,” Jayawardene added.
Under the previous regime, the UDA fell under the Ministry of Defence and Urban Development, which was administered by former Defence and Urban Development Secretary Gotabhaya Rajapaksa, who renovated the Independence Arcade and allocated retail spaces to luxury brands.
Jayawardene said that the situation has worsened with the run up to the general election, and that the income may have to be written off.
He said that the UDA’s surplus cash which were placed in fixed deposits have seen a significant decline in returns due to the prevailing low interest rates.
These, coupled with the increased wages for public servants outlined in the interim budget and the standard staff promotion process will bite deeply into the UDA accounts this year, he noted.
While revenues show a year-on-year (yoy) increase in the latest interim financial statements for the first quarter (1Q15) ending March, UDA Chairman Ranjit Fernando said that the accounts have been prepared on an accrual basis, which presents a skewed picture.
“Our accounts are prepared on the accrual basis. You can’t go on the income figure because that is not all collected. It’s not on cash, but what we should have got,” he said.
Therefore, while the UDA’s group revenue shows an increase to Rs.709.83 million in 1Q15 compared to Rs.620.60 million yoy, cash flows show only Rs.126.09 million in rent and Rs.171.03 million in lease premiums received for 1Q15.
Administrative expenses increased to Rs.574.12 million from Rs.479.11 million yoy, while other income which included interest from fixed deposits fell from Rs.276 million to Rs.99.93 million yoy.
Interestingly, finance costs declined to Rs.4.41 million from Rs.130.53 million yoy despite the balance sheet showing an increase in interest bearing borrowings.
Jayawardene said that the group’s 4 subsidiaries companies—which include Water’s Edge—have prepared their accounts properly and paid dividends on time.
The share of profit of equity from these companies have fallen from Rs.117.60 million to Rs.15.58 million yoy, showing a significant loss in profits in these state-owned institutions.
However, an accurate picture cannot be painted due to shortcomings in the accounting methods.
“We’re going through a lot of changes. So you need to give us about a year or so to let us really get to the business level. Then it’ll be a different story. So it’s kind of unfair to compare right now,” Jayawardene said.
