Letlole hunts for deals with proceeds of Cresta sale
Pauline Dikuelo | Friday October 4, 2019 11:51
LLR shareholders approved the deal earlier this year, under which the property group sold President Hotel, Cresta Lodge, Thapama Hotel and Cresta Bosele to Cresta.
The deal sailed through despite the sale amount representing a 7.7 percent discount on the value of the four properties, which was pegged at P254.7 million in December 2018.
Commenting on the group’s results for the full year ended June 30 2019, Letlole CEO Chikuni Shenjere-Mutiswa said the proceeds of the sale would be looking for opportunities this year.
“The company maintains a very healthy pipeline locally and regionally and shall be deploying the sale proceeds during the course of the coming financial year,” he said.
Letlole has already purchased Lot 22033 in a “prime industrial area” in Gaborone for P31.1 million under a deal finalised on August 14. The CEO revealed that the while the Cresta deal had resulted in “book loss” of P27 million, the transaction was in line with reducing Letlole’s risk profile which was exposed to the threat of leasing several properties to a single tenant.
Shenjere-Mutiswa added that Letlole had acquired two industrial properties in Gaborone during the full year to June 30, 2019.
“The move (divestment from the hospitality sector) has seen Letlole 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,” the CEO said.
The sale of the hospitality assets also saw the value of Letlole’s investment properties decline from P970 million to P780 million.
Meanwhile, Letlole’s pretax profits for the year slipped to P74.8 million from P92.4 million the prior corresponding period due to the impact of the Cresta disposal as well as the removal of a once-off revaluation gain from the prior year.
The property group’s topline however rose 28% year on year to P102.5 million as various assets fully contributed with annual rental escalations steady.