NAP profits rise to P235m
Keikantse Lesemela | Tuesday October 28, 2014 16:49
The assets include mostly retail centres such as Riverwalk Mall, Kagiso Mall, Kasane Mall, and Mafenyatala Mall in Molepolole among the 65 properties owned by the company. Commenting on the published financial results, NAP Managing Director, Tobias Mynhardt said the company has provided growing income streams to investors since it’s listing in 2011.
“The board remains confident that the property portfolio is positioned to deliver growing income streams for the year ahead, continuing the trend of predictable and sustainable returns to investors established to date,” he said in a commentary. The commentary indicates that the increase in profits was driven by fair value adjustment of P112.9 million compared to P88.9 million in 2013. “This increase in valuations was attributable to growth in net rental income as well as a 99 basis point shift in the heightened average capitalisation rate,” states the commentary.
However, Mynhart said the revaluation adjustment, together with other fair value and accounting adjustments and the related taxes thereon are treated as non-distributable income and are only expected to increase the net asset value of the company.
NAP was listed on Botswana Stock Exchange in 2011. Its properties have 440 leases over the 65 properties including, Cash Bazaar Holdings subsidiaries, such as CB Stores, Topline, Sole Shoes, Taku Taku, Furnmart and Home Corp.
NAP portfolio is largely concentrated in the retail space, a sector that experts have said is showing signs of distress due to oversupply. Letlole La Rona Real Estate manager, Sethebe Manake, recently said the retail market has reached saturation level while the industrial market is upside on the horizon. There is an increase in rental rates, demand for large industrial sites and distribution centers.
The 2014 edition of the authoritative AT Kearney Global Retail Development Index (GRDI) indicates that Botswana has dropped to the 26th position in rankings as the market reaches saturation point due to the mushrooming of many malls in a short space of time.
In the past three years, three malls - Sebele, Rail Park and Airport Junction have opened shop in Gaborone with most tenants being South African retailers. Reflecting the trend towards saturation, retail sector rentals have also softened in the past two years with International Property Database (IPD) estimating returns on the retail space to have declined from 20.1 percent to 16.6 percent last year largely on the back of tenants’ inability to negotiate for better rates due to the massive supply mostly in the Gaborone area.