Letlole La Rona reports record revenue and operating profit as near-full occupancy and a completed refinancing steady the balance sheet in a slowing economy
In a year when Botswana’s economy strained under soft diamond demand, elevated interest rates and tight liquidity, the country’s property landlords might have been forgiven for simply trying to survive. Letlole La Rona Limited did better than that. It grew.
The Gaborone-based property group, whose portfolio of commercial, retail and industrial buildings is now valued at roughly 1.9 billion pula, reported on Sept. 29 that revenue for the year ended June 30 rose 7 percent, to 215.2 million pula from 201.8 million a year earlier. Operating profit climbed 8 percent, to 128.4 million pula from 118.8 million. Perhaps most telling for a business under cost pressure, the company spent less to earn each pula: its cost-to-income ratio improved to 36 percent from 38 percent.
Behind those numbers is a simple, durable fact. The company’s buildings stayed full and its tenants kept paying. Occupancy held at 97 percent, and rental collections also came in at 97 percent – figures that would be the envy of landlords in far wealthier markets. In the language of real estate, that is a portfolio doing exactly what it is supposed to do.
“The Group’s property portfolio continues to show a resilient performance,” the company said, crediting the quality of its assets and a deliberate strategy of engaging tenants early to keep them in business and in place.
The headline that will catch some eyes, a drop in profit before tax to 62.9 million pula from 131.2 million, tells a more technical story than it first appears, and management was at pains to separate accounting from economics. The decline was driven largely by a 23.6 million pula non-cash fair value loss on investment properties, a swing from a 49.8 million pula paper gain the year before, along with higher finance costs and foreign-exchange losses on borrowings denominated in South African rand. None of it, the company stressed, touched the cash the buildings actually generate.
That cash remained formidable. The group produced 120.8 million pula from operations during the year, and its net asset value rose 6 percent, to 1.25 billion pula from 1.18 billion. The carrying value of the property portfolio itself edged up 2.4 percent, lifted by the inclusion of a development taking shape in Selebi Phikwe, the former copper town that Botswana has been working to reinvent.
If there is a theme to Letlole La Rona’s year, it is discipline in the face of a rising cost of money. Finance costs jumped 25 percent, to 61.9 million pula, as lending rates climbed and the company borrowed to fund its development pipeline. In response, management completed a refinancing of its portfolio well ahead of facilities that were due to mature at the end of December 2026, securing additional funding from a South African lender on what it described as favorable terms.
The new borrowing environment is expected to be more expensive, and the company is not pretending otherwise. Its answer is to turn its cash flow toward paying down debt. “Available cash being prioritised towards debt reduction,” management said, laying out a plan to cut leverage and fortify the balance sheet while keeping enough liquidity to keep growing. It is the kind of unglamorous, defensive posture that tends to look wise in hindsight.
The year also brought new leadership. On June 1, Ronil Besele became chief executive. A member of the Royal Institution of Chartered Surveyors, he holds a degree in real estate and development from the University of Queensland and a master’s in financial management from the Australian National University, and arrives with about 20 years in the industry; more than 12 of them in executive roles. He joins from the Special Economic Zones Authority of Botswana, where he was property development executive, and previously worked in Deloitte’s real estate advisory practice in Sydney. His international résumé, the company suggested, is meant to help steer its “next phase of sustainable growth.”
For the people who own the company’s linked units, the year delivered a return in cash as well as on paper. The board declared a final distribution of 6.5 million pula, a dividend of 0.05 thebe per share and interest of 2.22 thebe per debenture, payable on or about Oct. 28 to holders on the register at October 16.
Letlole La Rona is not forecasting an easy stretch ahead. It expects the operating environment to stay difficult in the short to medium term, with continued pressure on occupancy, tenant performance and collections as Botswana’s economy adjusts. But the company’s message was one of steadiness rather than retreat: a diversified portfolio, an established tenant base, costs under control and a balance sheet being deliberately strengthened.
In a year that tested Botswana’s businesses, Letlole La Rona grew its top line, widened its operating margin, kept its buildings full and locked in its funding before the deadline. For a property company in a slowing economy, that is not a bad definition of a good year.
