NAP records decline in profit
Property investment company, New African Properties ‘ s profit before tax declined by two percent to P7.8 million for the half year period ended January 2022 as maintenance costs increase.
The company saw its property costs decrease by 4, 7 percent due to lower impairments. Commenting on the published results, NAP Managing Director Tobias Mynhardt stated that the decrease in property costs was driven by lower impairments. “Excluding these, costs increased by 12 percent as a result of an 18 percent increase in security, refuse and cleaning costs increased by 64 percent and a further increase in repairs and maintenance due to a phased maintenance and servicing schedule.”
Portfolio costs have also decreased by 1.7 percent. However, profit after tax increased by 8.8 percent to P87.8 million. Mynhardt reported that three properties were acquired during the half year period at a total cost of P63 million. He said these acquisitions were funded from available cash and the property yield is expected to be higher than the return on cash. “The properties are retail properties located in Maun, Ghanzi and Ramotswa and complement the existing portfolio. They are fully tenanted with 92percent of rentals generated from listed and multinational tenants. Directors’ have valued these assets at original costs in these interim results. It is possible that the external valuer will value these assets at a capitalisation rate that differs to the acquisition yields at year end.” Meanwhile, the company noted that vacancies have remained at similar levels to last year period, while there has been a significant reduction on monthly tenancies from 11 percent to six percent during the period. The company highlighted that new acquisitions have utilised existing cash resources and creates the opportunity to introduce gearing for future acquisitions. “Gearing at moderate levels should enhance the long term returns to investors but does introduce some exposure to interest rate fluctuations.”
NAP has a diversified portfolio of 64 properties across Botswana mostly retail as well as a small portfolio in Namibian retail properties. During the year ended July last year the company reported that Covid- 19 contributed to the muted growth in revenue. “The pandemic and the ensuing restrictions impacted the portfolio in a number of ways. One of the most significant being the effects of the curfew and liquor restrictions on restaurants, fast food and entertainment, which had a significant effect on Riverwalk, as well as on liquor retailers. In addition, vacancies took longer to re- let, particularly in certain categories of vulnerable retailers and geographic areas dependent on tourism. In these particular cases, tenant retention became the main leasing driver.” The vacancy and new lease following the liquidation of the previous Payless owners also had a negative impact on growth in the applicable properties.