LETLOLE ADDS SIX PROPERTIES TO PORTFOLIO
Botswana Stock Exchange listed-Letlole La Rona ( LLR) has expanded its portfolio through the acquisition of six prime industrial properties at a purchase consideration of P174.4 million.
However, when commenting on LLR’s financial results for the year ended 30 June 2020, acting chief executive officer, Kamogelo Mowaneng said due to the conclusion of the transaction late in the financial year, the benefits of the acquisition were not materially reflected in the current financials.
“As at 30 June 2020, four out of the six properties had been transferred and two remained. Subsequent to the end of the reporting period, the acquisition Plot 22047 Gaborone was concluded on the 6th July 2010. Plot 54060 Phakalane was also transferred to LLR on the 17th of July 2020,” she said.
On February 2020, the company entered into a purchase and sale agreement with Western Industrial Estate (Proprietary) Limited to purchase a portfolio of industrial properties at a purchase consideration of P174.4 million.
The acquisition was wholly funded by cash reserves from the sale of the leisure portfolio to Cresta Marakanelo Limited, which was concluded at the tail end of prior financial year.
Last year, LLR shareholders approved the P235 million from the hotel sector through the sale of the four iconic properties to the Cresta Marakanelo Group. The hotels are President Hotel, Cresta Lodge, both in Gaborone, Thapama Hotel in Francistown and Cresta Bosele in Selebi Phikwe.
By then, LLR said the local hotel industry had become increasingly competitive leading to rentals drifting above market at a time when occupancies were under pressure.
Mowaneng added management was proactive in ensuring that vacancy levels were low. “At close of the current financial year, vacancy rate for industrial and commercial portfolio was insignificant, currently at 1. 8%,” she said.
About 67% of LLR’s portfolio is industrial followed by office at 22%, retail at six percent and, ultimately, residential at five percent.
The investment property portfolio remains resilient to the effects of the COVID-19 pandemic with the properties achieving a 32% capital growth from the prior year’s fair value gain of P26.3 million.
The investment property portfolio, with the addition of the new properties acquired during the year under review, now stand at P961 million.
Just like any other business, Mowaneng said, COVID-19 pandemic has crippled both the global and local economies resulting in a delay in the execution of the projects and acquisitions which the Company had in the pipeline.
“LLR has had to re-assess its pipeline in light of the effects of the pandemic to determine which ones will be value-accretive. We remain optimistic that the local economy is on its way to recovery, especially with the assistance of the measures that Government has put in place,” Mowaneng said.
“Despite the setbacks, we believe there are still a lot of opportunities, now more than ever, to grow our portfolio both locally and regionally, and enhance the distribution offered to unit holders. LLR endeavors to continue with its vision of transforming spaces.”
According to the financial results, LLR has experienced a 24% increase in profit before tax (continuing and discontinued operations) from the prior year’s profit of P64.6 million.
The company said the improved profitability is mainly as a result of the recovery from the prior year’s profit, which was depressed by a once-off book loss of P27 million upon the sale of the hospitality portfolio.
Despite the stock market being bearish over the past 12 months, LLR has seen its share price rising significantly from its opening value of 185 thebe per linked unit to 233 thebe as at June 30, 2020. Earnings per share rose by 10% from the 23.44 thebe in June 2019 to 25.68 thebe this financial year.
“This goes to prove that investors continue to have confidence in the Company. It (the Company) remains with relatively low debt levels which allow sufficient room for LLR to continue pursuing its strategy of securing yield accretive acquisitions,” the acting CEO added.