- Revenue grows by 4.6%
- Newly acquired properties fully tenanted
- Vacancy levels remain the same
New African Properties (NAP) Limited, which specialises in owning and managing commercial, residential and industrial real estate assets, says its profit after tax for the half year ended 31st January 2022 has increased by 8.8 percent while profit before tax was down by 2.7 percent below the comparative period in 2021.
“Profit before tax is 2.7 percent below the comparative while profit after tax is 8.8 percent up,” NAP revealed in its results for the half year ended 31 January 2022. “The fair value and other accounting adjustments net of tax amount to a P1.7 million (2021: P0.1 million) and account for the difference between distributable income and profit after tax. The tax credit is primarily the result of the indexation adjustments which reduces the deferred tax liability.”
The property company says its net distributable income of P86.2million (14.26 thebe per unit) is 6.6 percent up on the comparative P80.9million (13.38 thebe per unit). While revenue grew by 4.6 percent excluding rental straight-line adjustments, property costs decreased by 4.7 percent.
According to NAP, the decrease in property costs was driven by lower impairments. Excluding this, costs increased by 12 percent because of an 18 percent increase in security, refuse and cleaning costs and a 64 percent increase in repairs and maintenance due to a phased maintenance and servicing schedule.
“Portfolio costs have decreased by 1.7 percent,” the company says. “External valuations are prepared annually for the year-end. The board has retained the last external valuations for these interim results with the exception of Riverwalk where a desktop valuation has been performed using the same methodology and discount rate as that used for the 2021 year end. The unimpaired exposure to debtors excluding the VAT impact is P2.2 million at 31 January 2022.”
NAP stated that there were three properties acquired at a total cost of P63.0 million during the period under review. These acquisitions were funded from available cash and the property yield is expected to be higher than the return on cash. The retail properties, which are located in Maun, Ghanzi and Ramotswa, complement the existing portfolio and are fully tenanted with 92 percent of rentals generated from listed and multinational tenants.
“Directors have valued these assets at original cost 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,” said NAP. Vacancies have remained at similar levels to year-end while there has been a significant reduction in monthly tenancies from 11 percent to 6 percent during the period.
According to the report, the new acquisitions have utilised existing cash resources and create an opportunity to introduce gearing for future acquisitions. It highlighted that gearing at moderate levels should enhance long-term returns to investors but does introduce some exposure to interest rate fluctuations. The property company is a public variable rate loan stock company offering investors the opportunity to share in a diversified portfolio of 64 well-established, strategically located, primarily retail properties across Botswana as well as a small portfolio of Namibian retail properties, all underpinned by quality tenants.
