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NEW AFRICAN PROPERTIES LTD
"the Company" or "New African Properties" or "NAP"
Incorporated in the Republic of Botswana,
Company No. Co 2008/545
BSE share code: NAP
ISIN code: BW 000 000 1049

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Profile Of The Company

Key Salient Information

Returns - A Value Adding Investment

Property Portfolio

Our People

Administration

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Retail is our core focus and where we are able to add most value and this is reflected in the composition of the portfolio.

The portfolio comprises 64 properties, predominantly retail and Botswana based, with a small exposure to Namibian retail (3%) and Botswana industrial (1%). Certain Botswana retail properties have a small office component but properties are categorised based on primary use.

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* Fair value before rent straight line adjustment.

The properties have a wide geographical spread within the relevant countries, with 57 properties in Botswana and 7 in Namibia. The acquisition and development of the properties was 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.

The top 10 properties by value comprise 80% (2015: 78%) of the total value of the portfolio at year end.

Lot 1085/6 Francistown, was disposed of for its carrying value of P2.5 million during the financial year as it no longer met the investment objective of NAP. 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. A small industrial property in Selebi Phikwe was damaged by a fire in March 2016 and is being reinstated, the costs associated with this have been covered by the insurance policy.

The properties are occupied in terms of 458 leases. The top ten tenants contribute approximately 48% of total rental and occupy 51% of gross lettable area. These tenants are all well-known and established operators and include Pick 'n Pay, Spar, Choppies, Mr Price, Woolworths, Pepkor, Furnmart, Knockout, Payless and CB Stores.

The graph below analyses the current rental income composition at year end and reflects the relative strength of the NAP's underlying income streams, with 56% of rentals being received from listed and multinational companies, 13% from national retailers and a further 5% and 3% from franchisees and Government respectively.

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Vacancies have remained at low levels throughout the year and amount to 1.2% of gross lettable area and 0.7% of rentals at year end (2015: 2.8% and 1.9% respectively). In addition to improving the overall vacancy level, Management has either renewed or relet 94%, by value, of leases expiring during the period with the average increase in rentals approximating standard escalation rates embedded in the leases. Of the remaining 6% of lease expiries, 3% relates to the property disposed of and leases still under negotiation. Almost half the year end vacancies (746 m2) relate to Selebi Phikwe, with a further 270 m2 let pending the resolution of licencing issues relating to apparel retailers and 434m2 related to an industrial property in Francistown. Prospects of letting the Selebi Phikwe space are likely to be limited in view of the recent news of the BCL closure.

The lease expiry profile as at 31 July 2016 based on gross lettable area and financial years comprises:

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Monthly tenancies amount to 1 247m2 and comprise recently expired leases where renewal negotiations or lease finalisation were still underway at year end.

Based on current demand and interaction with tenants we are confident of retaining the major tenants with expiring leases over the next few years. Most of the expiries in each year are fairly evenly spread across buildings and tenants, with some weighing towards Riverwalk and Bobonong in 2017 and Riverwalk and Plaza Centre in 2018, with cyclical Mafenyatlala expiries in 2020. These properties are currently all fully let.

Unprovided tenant arrears amount to P0.3 million (2015: P0.7 million) at the end of the year with no write-offs during the year (2015: P0.5 million) and after adjusting for the VAT impact are effectively fully provided for.

CONCLUSION
The 2016 financial year has once again demonstrated NAP's ability to meet its primary objective of providing investors with a steady, predictable and growing income stream generated from the property portfolio and the quality of the underlying leases. The contractual property net rental growth continues to be sound and the Board remains confident of achieving distribution growth approximating rental escalations next year.

The current demand for assets in Botswana has had an impact on the pricing and availability of assets for acquisition. Recent restrictions in granting licences to foreign controlled apparel retailers may adversely impact potential new developments which will further impact the extent of assets available for investment and therefore the ability to grow the asset base. This issue is only applicable to new licences and does not impact NAP's existing tenants and their ongoing occupancies in these premises.

NAP is well positioned to fund developments and acquisitions in view of its virtually ungeared status and would benefit from the introduction of gearing.

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