Letlole expands portfolio through acquisitions
Staff Writer | Tuesday September 27, 2016 16:30
LLR recently acquired a residential estate in Gaborone from the Botswana Development Corporation (BDC) for P42 million that raised the company’s portfolio value to P710 million.
“LLR will continue treading the path of aggressive investment strategy, through considered acquisitions that would add value to growth of the balance sheet and diversification of its portfolio.
“Owing to the company’s relatively low gearing, we have the capacity to continue targeting acquisition of strategic property.
“The company has a number of pipeline projects that it is considering with a view to growing the balance sheet and profits,” the company said in a statement accompanying its results for the year ended June 30, 2016.
Since its inception, LLR confined its operations to industrial, leisure, commercial office and retail space with growth purely organic, driven largely by implementation of annual escalation clauses. During the period under review, LLR profits and rental income were largely flat due to an unfavourable property market that has seen some commercial office space and some secondary retail space bearing the brunt of falling rentals and reduced yields.
In the year to June 30, 2016, LLR recorded a marginal gain of 0.04% in rental income to P67.2 million while net profit came in seven percent lower at P73.9 million. According to LLR, this performance is satisfactory given the fact that two of its properties, which had over the years benefited from fixed annual compound escalation clauses, were affected by a drop in rental rates. At the balance sheet date, LLR says the company’s net current position was negative due to the use of available cash resources to finance the major acquisition. However, post the balance sheet date, the company’s cash flow position has normalised and the net current position has reverted to positive.
During the review period, earnings per linked unit were 29.29 thebe while the balance sheet grew by 7.9% to a value of P741 million. The total distribution for the year comprises 13.2 thebe interest and a 10 thebe dividend.
Going forward, the company says it has entered into an agreement to acquire one-third participatory interest in NBC partnership. The partnership owns a shopping centre development in Francistown with the transaction estimated to cost approximately P35 million.
The Francistown property which is valued at P104 million is currently equally owned by BDC, Bifm and Northern Investments.
Post the transaction, Letlole will own BDC’s one-third participatory interest.