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High Phikwe vacancies worry property giant

Publishing Date : 07 May, 2018


New African Properties Limited ("NAP") LTD a public variable rate loan stock company listed on the Botswana Stock Exchange (BSE) on 28 September 2011 has realized an improved percentage, with Selibe Phikwe making up more of the realized percentage.

The company headed by JT Myanhardt has in their unaudited interim results for the 6 months period ending January 31st 2018 explained that vacancies have improved during the period. The said vacancies have gone down to 2.5 percent of gross lettable area from the 3.2 percent which was last reported in the full year 2017 financial results. Even so, NAP highlights that Selibe Phikwe contributes tremendously to the 47 percent of total which saw a 36 percent increase in vacancies in this area over the period.

Excluding Selebi Phikwe, the vacancy level is reported to be 1.4 percent, a difference of 1.1 percent realized when the former copper mining town is added. Selibe Phikwe which continues to suffer the effects of the closure of the BCL Mine is according to the results contributing to the high registered number of the vacant properties. Even with plans to resuscitate the town through the Selibe-Phikwe Economic Development unit (SPEDU) region, a number of investors have not shown any major changes financially even after the zero (0) percent tax incentive introduced early this year.

According to the results, 31 percent of NAP leases for the non-vacant buildings are set to expire this financial year and some will expire in the first half. This though leaves the loan stock company’s current market capitalisation of P1.8 billion with some of its balances due in the second half and weighted towards year end.

The current demand for assets in Botswana has had an impact on the pricing and availability of assets for acquisition. Having noted in the past financial results restrictions in granting licenses to foreign controlled apparel retailers by the government is bound to increase their turn over this year, NAP noted in their past results.

Distributable income for the 6 months amounted to P74.1 million which equates to 12.25Thebe per linked unit. A 9.3 percent increase on the comparable period of 2017 which saw a registered 67 million amounting to P11. 21 thebe. The half year results highlights a growth in distributable income attributable to 10.4 percent increase in net rental income which is reported to have been reduced by the impact of lower net investment income and increased portfolio costs and tax.

The net rental income growth included an amount relating to a prior period following the finalization of a contractual rent review that was outstanding at last year end. Excluding the not yet finalized review, net rental income grew by 8.3 percent. The net value of these items is less than reported last year, which results in a P7.9 million decrease in profit.

The company owns a portfolio of strategically located retail properties in prime shopping nodes throughout Botswana as well as a portfolio of Namibian retail properties. The portfolio comprises 64 properties, predominantly retail and Botswana based, with a small exposure of 3 percent to the Namibian retail and 1 percent in Botswana industrial. Certain Botswana retail properties have a small office component but properties are categorized based on primary use.

The acquisition and development of the properties is reported to have been driven by the demand for retail property and as a result the majority of the properties are located in urban and semi-urban areas of Gaborone, Molepolole, Tlokweng, Maun, Kasane and Selebi Phikwe

There have been no further changes in the portfolio during the year and there are no material commitments or contingent liabilities at 31 July 2016. The top ten tenants contribute approximately 48 percent of total rental and occupy 51 percent of gross lettable area. These tenants are all well-known and established operators which include Pick 'n Pay, Spar, Choppies, Mr Price, Woolworths, Pepkor, Furnmart, Knockout, Payless and CB Stores.



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