NAP profits rise in stable property market
Pauline Dikuelo | Friday April 21, 2017 17:45
The group’s distributable income for the six months has increased by 10% to P67.7 million from P61.5 million that was recorded in the prior year, resulting in a first half distribution of 11.21 thebe per linked unit.
According to the group’s managing director, Tobias Mynhardt the increase in distributable income is attributable to a 9.4% increase in net rental income before adjustments, a 6.9% increase in net finance income and flat portfolio costs.
“The increase in net rental income is higher than expected in view of certain turnover rental being received in the first half instead of the second half, which increased the growth from 8.2% to the recorded 9.4%,” he said.
He said the total portfolio costs are flat as a result of an increase in recurring costs being offset by the non-recurrence of the realised exchanged loss reported last year.
According to the managing director, directors valued the property portfolio as at January 31, 2017 at P1.4 billion before rental straight-line adjustments.
He said that overall arrears, vacancies and lease expiries continue to reflect solid performance with some concern over the sustainability of the Selebi-Phikwe properties in view of the current issues in the area. In addition, he said total arrears attributable to tenants in Selebi-Phikwe have started to increase with these tenants comprising 10% of total gross arrears at the end of January.
“The costs for reinstating the Selebi-Phikwe property following last year’s insurance claim and capital expenditure was 4.3% while the increase on the 2016 comparative is 7.9 %. Included in the costs for the reinstatement of the Selebi-Phikwe property is a P40,500 development management fee payable to Nafprop, a related party.”
Mynhardt said that un-provided tenant arrears amounted to P0.4 million as at January 31, 2017 compared to the P0.5 million that was recorded last year in the corresponding period.
NAP’s exposure to this area has been analysed following the BCL Mine closure in October 2016 and it comprises 2.9% of total property value, 33% of total vacancies and 3.5% rental income at end January.
“A number of leases expiring in the current year have already been renewed at favourable rentals with the remainder under negotiation inline with the expiry profile.”