Tuesday, September 22, 2020

Letlole tip-toes towards the retail market

BY BONNIE MODIAKGOTLA

From the surface one is compelled to say there are just too many shopping malls in Botswana for a jobless growth economy. But do not expect that assumption to hold for everyone, particularly for some property developers who see potential in the retail market.

Letlole La Rona (LLR) – the property listed company ÔÇô is one company that will be looking at the retail sector for future growth. The company’s property portfolio is currently dominated by the industrial sector, but that could change in the coming years as the company intends to invest in the retail market. In fact, it is already happening.

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 P145 million. Boitumelo Mogopa, the company chairperson, said it was a great opportunity not to miss given the limited opportunities of acquiring secondary assets, and gave praise to the company’s management team for successfully closing deal in what was a “competitive bidding process”.

Mogopa said the acquisition significantly increased the firm’s portfolio value, up by 24.7 percent to P970 million. “Going forward, LLR will be actively looking to increase the weighting of this sector as the portfolio grows and becomes more focused,” she said in the company’s recently released 2018 annual report.

Also echoing similar sentiments is Chikuni Shenjere, newly appointed LLR CEO, who explained that the retail sector has a good track record of attractive returns, citing robust growth over the past 15 years which has not slowed downed, and has in fact led to existing competitors expanding their retail exposure.

More players are expected to enter the retail market, signaling that despite “the longstanding concerns of overtrading and over borrowed consumers”, retail demand is still on the rise, Shenjere said.

He added that retail rentals reflect the resilience of the sector, which on average yields about 8 percent, a show that the market continues to enjoy good occupancy rates and inflation beating escalations.

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.