Industrial assets buoy Letlole�s portfolio
Pauline Dikuelo | Tuesday November 17, 2015 18:00
According to their annual report, the LLR portfolio was valued at a recorded P622.3 million compared to the P578.5 million registered the year before on the back of strong support from industrial properties.
Property experts have indicated that the prices have been dropping recently as supply outstripped demand, particularly in the office space.
On the other hand, the industrial space continues to be fairly stable while the prime retail property market is nearing saturation.
LLR Chief Executive Officer, Paul More said the industrial property has continued to benefit from their portfolio as a stable income flow was received from leased industrial space.
“The industrial sector recorded P292.6 million, followed by leisure with P239.5 million, office with P52 million and retail with P38.2 million for the year under preview,” said More.
According to the latest IPD index, the top-performing sector for 2014 was industrial property, which delivered a total return of 16.8 percent while the retail, office and residential sectors all delivered between 10 percent and 11 percent total return.
He added that over the last four years their portfolio had enjoyed an average capital value growth of 12 percent per annum.
“All the growth was organic and primarily attributable to the retention of good quality well maintained property as well as implementation of annual compound escalations,” he said.
Currently, LLR has 14 properties in the country, which include the President Hotel building, Marakanelo Conference Centre, Moedi House, Dunlop Warehouse and Landmark Warehouse.
In addition, More said the fair value of the company’s investment properties was based on open market values of the properties as at the year-end.
“The strategic shift embraced by LLR now compels us to pursue indigenous and creative means of acquiring and developing property that will add value to the company’s asset base,” he said.
Still on their list, More noted that for the next financial year, LLR would consider the option of off-shore investments importance looking at what real estate markets in Africa could offer.
“Property and other investment opportunities in the continent are attracting a lot of interest from both eastern and western countries. This is further driven by increased purchasing power of people living on the continent,” he said.
In addition, he said they would gather market intelligence on markets demonstrating potential growth in property investment and will piggyback on strategic partners with an established foothold in these markets.
For the year under review, a focus on cost efficiencies continued and the company’s cost to income ratio stood at 18 percent relative to 23 percent achieved in the previous financial year.