New African Properties (NAP) seeks investment opportunities in other towns as the market for the Gaborone office is oversupplied.Commenting on the financial results, New African Properties Managing Director, Tobias Mynhardt said NAP management continues to look at opportunities that meet their business objectives as they see opportunities in other Botswana towns.
”New retail development opportunities in Gaborone are considered limited at this time in view of the significant development that has taken place in recent years, while the Gaborone office market is considered to be oversupplied. There are however opportunities in other Botswana towns,” he said.Mynhardt said the current demand for assets in Botswana has had an impact on the pricing and availability of assets. He said although the fund has access to a pipeline of potential developments, the planning and regulatory environment are affecting the timeframes and ability to bring the projects to fruition.
The company recorded a decrease in profits to P199 million in the year ended 31 July 2015 from P211 million recorded in 2014. However, the property portfolio performed well with contractual net rental income increasing by 9.6 percent as a result of increased rentals, contained expenditure and a significant reduction in debtors’ impairments. “The performance to date demonstrates that the current NAP property portfolio is capable of producing growing returns to investors in line with the primary objective of growing distribution on a sustainable basis. The board remains confident that this will be achieved in the year ahead,” said Mynhardt. He said the management continues to explore opportunities to add to existing assets and the Riverwalk food court, which has undergone significant changes during the year and now offers the most diverse and quality management.
Property valuations increased to P91.5 million fair value gain, before straight line adjustments which amounts to an 8.1 percent increase on the opening value of P119.2 million in 2014. The valuation gain was mainly attributable to increase in net rentals but also resulted in 22 basis point shift in the weighted average capitalisation rate. “Due to the significant 99 basis point shift in the capitalisation rates last year as a result of the reduction in long bond rates, the increase in valuations this year is lower than last year and as a result net profit reflects a decrease,” reads the commentary.
Vacancies continue to remain at low levels amounting 2.8 percent of gross lettable area and 1.9 percent at the end of 2014. This indicates the demand for the space and quality of management. According to the recent market outlook research for 2015, Stockbrokers Botswana indicated that the property counters still offer good yields and still remain attractive from an income point of view. Historically, property counters have served as a good vehicle to park in low interest rate environment as the benefit attained from decreased debt service charges flows straight to the bottom line. Naturally, we expect further price appreciation for all property counters,” reads the research.