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Watershed Mall does magic for Letlole La Rona

Publishing Date : 07 October, 2019

Author : ALFRED MASOKOLA

The acquisition of Water Shed Piazza in Mahalapye from Josh Posh Investment in March last year has significantly boosted Letlole la Rona revenues for  the financial year ended 30 June 2019, the Botswana Stock Exchange (BSE) listed  real estate loan stock outfit reported last week.


Total Revenue for the year grew by 28 % from P82 million recorded at 2018 year end to close the year at over P102 million. Letlole la Rona says the increase was underpinned by a full years’ contribution of Watershed Mall which came into the portfolio at the tail end of the 2018 financial year. On the 7th of December 2017 Letlole La Rona announced that it has entered into an agreement with Jus Posh Investments (Proprietary) Limited to acquire Lot 29052, Mahalapye from the former.


The acquisition of the Property encompassed all land, buildings and improvements, under the real estate parameters of a fully developed retail center known as Watershed Mall located along the A1 road in Mahalapye. In late January 2018 Competition Authority released a circular to the market alerting any interested parties about the transaction. Two months later Letlole La Rona sealed the deal with sole owner of Josh Posh Investment, Seloma Tiro and paid P149 million for the property.


In several communiqués during the acquisition process Letlole La Rona observed that brining Watershed into its fold would add significant weight into their investments and broaden the company’s footprint reach. “This retail property will enhance LLR’s property value and diversify the portfolio in line with the strategic objectives of the Company. It also provides geographical spread opportunities,” noted the company in 2018.


Zooming into other financial highlights during the June 2019 year end shows that rental gatherings went up by 7.5 %. “This underscores the quality of our portfolio which was also enhanced by the purchase of newly developed, fully tenanted warehouses in Gaborone’s Block 3,” observed LLR Chief Executive Officer, Shenjere-Mutiswa. This increase in revenue pushed full year   operating profits up by 22 % to plus P75 million from just over P61.4 million registered in the prior year while net cash from operating activities grew by 6 % with tighter working capital management.


The company also recorded  improved cash collections resulting in  core cash resources ending the year at P44.6 million, significantly higher that the P34.5 million at the end of the previous financial year , this was also bolstered by revenues year on year good. Following its acquisition of the positively performing Watershed Mall last year LLR this year took a decision to divest significantly from the hospitality sector. The company says this was a first decisive execution of LLR’s deliberate strategic shift. This entails sales of the four hotels to Cresta Marakanelo Limited, Botswana’s premier hospitality and hotels operator.


LLR says disposing all its hotel interest via a sale to the sitting tenant was in line with its diversification strategy.  Chairperson of Letlole La Rona states in the financial results commentary that the move has seen LLR dramatically reduce its risk profile, removing exposure to a single tenant who occupied up to a third of its portfolio while at the same time unlocking capital to carry out its restructuring and growth path.


This has however  led to a book loss of P27 million  ,while on the other side  there were two additions of properties in Gaborone’s key industrial nodes as the business consolidated its lead in this sought after sector of the market. The net result of this disposal combined with the absence of full year 2018’s significant one-off revaluation gain on  a single property  resulted in profit tax declining from P95 million  recorded at 2018 year end  to P65 million . This was also contributed to by taking into consideration of discontinued operations.


On the overall Letlole La Rona directors say the company’s strong performance above expectations continues despite the current subdued economic environment underscoring that a well –diversified growing portfolio has secured the business cash generation ability against macroeconomic headwinds with the company consistently delivering solid financial and operational results.


LLR says a well structured balance sheet and funding strategy has afforded the company the flexibility to swiftly seize opportunities as they arise. “Testimony to this is the fact that over the past two years we  has been involved in four of the five largest property transactions in Botswana,” highlighted the company in the financial statements commentary.    


The sale of the hospitality assets has seen the investment properties value decline from P970 million to P780 million. However the company says it maintains a very healthy pipeline locally and regionally and shall be deploying the sale proceeds during the course of the coming financial year. On the outlook LLR Board chairperson, B Magopa shared that the company is enthusiastic about the opportunities in Botswana and beyond the country‘s boarders.


“ We remain focused on  the company’s vision of becoming the premier real estate company with a signigificant presence in selected regional markets and a well diversified portfolio underpinned by high occupancies and quality tenant covenant,” he said. He added that with its current low generating ratio, healthy pipeline and property investment management expertise, the company is in the prime position to deliver this strategy.


For shareholders take home the BSE listed real estate group declared final distribution of 10.75 thebe per linked unit on the 25th June 2019 for the June year end . This comprised of a dividend of 0.05 thebe and debenture interest of 10.70 thebe per linked unit. The payout included a final distribution of 7.15 thebe per linked unit amounting to 20 020 000 and a special distribution of 3.60 thebe per linked unit totaling to P10 080 00.


This brought total distribution got the 2019 financial year to P57 316 000 being a dividend of 10 thebe per share  and interest of 20.37  thebe per linked unit Going forward the company will be looking to grow its distribution payout at a rate comfortably higher than Botswana’s inflation.

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