LETLOLE LA RONA SEEKS TO EXPAND LOCAL PORTFOLIO
...as the group’s investment portfolio reachs P2 billion
BOTSWANA’S diversified real estate entity, Letlole La Rona (LLR), has set its eyes on expanding its local investment portfolio as it seeks more growth into the future and beyond. With interests in retail, residential and industrial, LLR saw the value of its investment portfolio reaching P2 billion. This unprecedented growth has therefore become an inspiration for LLR to spread its wings further in pursuit of return in value for shareholders.
The Botswana Stock Exchange (Bse)-listed company creates value through rental income and assets management opportunities from its high quality real estate portfolio across industrial, commercial office, retail and residential sectors. Since 2019, LLR portfolio investment has been on a steadfast growth, going from P780 million and reaching P1 billion in 2021 amid the Covid-19 pandemic.
FIGURE
A little over three years, the company has doubled the figure with 95 percent of investment portfolio in Botswana while 5 percent is held outside the country. With the six months ended 31st December, 2023 impressive financial results, LLR portfolio continued to demonstrate strong performance with high occupancy rates of 99.2 percent as of December 2023, an improvement from the previous year’s 96.97 percent .
Further, LLR acquiring an additional 25 percent stake in JTTM properties from 32.79 to 57.79 percent means Rail Park Mall is now its subsidiary. While this increased the investment portfolio from P1.5 billion to P2 billion, LLR has now taken over the management of Rail Park Mall, which is considered a prime asset .
According to Chief Executive Officer, Kamogelo Mowaneng, the group’s portfolio continues to showcase strong performance as a result of ongoing focus on portfolio growth and optimisation.
“Having had a successful first half year by executing on the growth and asset recycling strategy through the acquisition of further stake in Rail
Park Mall, the conclusion of the sale of Moedi House and the ongoing sectional titles at the Red Square apartments, the group continues to explore opportunities for balance sheet growth and funding options that can be deployed to finance that growth. With our strategic acquisitions and value accretive refurbishment, we will focus on assimilating the group to ensure a smooth transition and enhance efficiencies in our processes,” said Mowaneng, who went on to explain that the sale of Moedi House was completed in August 2023, raking in P3.7 million to invest in other high gain assets.
Meanwhile, the group revenue closed at P77 million, with a fair value gain of P28 million as well as profit before tax of P72 million due to the consolidation of the Rail Park Mall results. Further, the group realised a massive gain on the disposal of equity accounted investment of P6.9 million at the time of acquiring additional shares in JTTM Properties.
“The movement of pension funds from 70 percent investment out of Botswana and 30 percent locally is ongoing, with the 50-50 model happening at a gradual pace and this, of course, has increased competition in the market. We will see how that will affect LLR. We are going steady in our investment, we don’t want to get into risky sectors, though we look forward to introducing other assets class at the right time,” said Mowaneng.
At company level, LLR recorded a strong performance with profit before tax increasing by 30 percent year-on-year while revenue increased by nine percent due to annual lease escalations of 6-7 percent. As a result, company profit before tax peaked at P64.5 million from P49.7 million realised in 2022 while contractual revenue went up to P52.2 million from P48 million.
OCCUPANCY
“Our investment portfolio was differentiated by the quality of our tenant base as demonstrated by good occupancy levels and strong collections of above 100 percent, including arrears, thus maintaining a healthy cash position with arrears within acceptable levels. As we strive for security of income, we have signed a long term lease of ten years with one of our new tenants post year end. We expect this, together with other leases which are up for renewal, to improve our lease expiry profile from the currently level of three years,” emphasised Mowaneng.
As its stands, LLR’S sectorial investment portfolio includes 54 percent retail, 43 percent industrial assets, and three percent residential. Founded in 2010, LLR is mostly owned by Botswana Development Corporation (BDC), Botswana Public Officers Pension Fund (BPOPF) and Debswana Pension Fund (DPF), with some indirect business interests in Kenya through Orbit Africa Limited.