Cresta, LLR locked in property disposal negotiations

03 Dec 2018

BY BONNIE MODIAKGOTLA

Letlole La Rona (LLR) - a Botswana Stock Exchange listed property company on Monday cautioned its shareholders that it is involved in negotiations that could result in the disposal of certain hotel properties. 

While the company did not reveal which hotels its mulling to dispose, the company’s leisure or hospitality exposure, which makes up 28 percent of LLR’s portfolio, includes Cresta hotels, in particular Gaborone Cresta Lodge valued at P85.5 million, and President Hotel valued at P84 million. 

Cresta Marakanelo Limited, also listed on the BSEL, also released a cautionary statement late Monday, advising shareholders that it is involved negotiations which are at an advanced stage. The statements from both companies are seen as confirmation that the two parties have been negotiating to dispose of LLR’s interests in Cresta hotels, a process that formally began in May.

Curiously, both Cresta and LLR have Botswana Development Corporation (BDC) is the top shareholder. BDC owns 65.79 percent of LLR, while its stake in Cresta is 21.18 percent. With details still sketchy, it appears BDC which has been divesting from some of its businesses might have used its controlling majority to exit its stake in Cresta. LLR is in charge of properties which used to belong to BDC. 

However, the decision to dispose of its hotel interests could have easily came from LLR board as well which has made its concerns of the health of the leisure segment. In its 2018 annual report, the hospitality industry has been flagged for being too competitive, with mushrooming of new hotels and lodges, leading to low occupancy rates.

LLR has since expressed its interest in the retail market as springboard for future growth. The company’s property portfolio is currently dominated by the industrial sector. In the 2017 financial year, LLR bumped its retail portfolio from 10 percent to 24 percent after its big purchase of the Mahalapye based Watershed Piazza mall at a cash consideration of P149 million.