Eatery outlets reduced NAP profit
“This is lower than expected as a result of certain tenant failures, primarily in the take away food and restaurant sector in view of the effect of COVID- 19, the delay in issuing of trading licenses and therefore lease commencement for reconfigured space at Mafenyatlala, the liquidation of Payless, where the liquidator opted to cancel one of the leases, and the challenges of letting vacancies in the second half of the financial year due to COVID- 19 disruptions,” said NAP.
The group’s property expenses increased by 1.1 percent while utility costs increased by 11.4 percent; this was offset by reduced management fees and realising savings on contractual services during lockdown periods. Net rental income showed a 1.0 percent dilution, primarily due to the increase in impairment provisions. The group indicated that excluding these provisions net rental income grew by 5.8 percent. “The weakening of the Namibia Dollar resulted in those properties contributing less to the Group than would otherwise have been the case,” said Mynhardt.
The MD explained that the impact of COVID- 19 has demonstrated the resilience of the majority of tenants while the categories of tenants most impacted by COVID- 19 are those in the entertainment sector and those dependent on the tourism sector in Kasane; but these tenants comprise a relatively small portion of the portfolio, 6 percent and 1 percent of July 2020 rentals respectively. Meanwhile, total unimpaired tenant arrears, net of VAT, at the year end amounts to P5.4 million which equates to 31 percent of the average monthly turnover for the year. “These amounts are primarily attributable to outstanding lockdown rentals on which we continue to engage with tenants.” The vacancy level at five percent and monthly leases at four percent of gross lettable area have increased by one percent from last year.
Selebi Phikwe accounts for 30 percent of the total vacant area at year end and a further 20 percent relates to two vacancies in small industrial properties in Francistown. Of the remaining 50 percent there is a weighting to Madirelo ( 14 percent) as a result of the liquidation of Payless, and the balance is spread across a number of properties and is mainly transitional in nature. The majority of the monthly tenancies are due to delays in finalising negotiations but where the tenant has indicated that they will renew.
Mynyardt said while COVID- 19 has had an impact on the results for the 2020 financial year, the impact on distributions has been limited and distributions equated to a 7.9 percent income return on the opening unit price.“There is still uncertainty over the duration and extent of the impact of COVID- 19 globally and in Botswana and the potential impact on NAP is uncertain. NAP’s balance sheet is sound and the Group is able to meet its commitments as they becomedueintheensuingyear. WithalowgearinglevelNAPremainswellpositionedto acquire properties where they become available.” NAP property portfolio includes 57 and 7 Botswana and Namibia properties respectively.