Sunday, January 29, 2023

LLR’s Railpark mall acquisition pays off?

The property investment company Letlole La Rona (LLR) which released its financials for the year ended June 2022 recently says the acquisition of commuters mall, Rail Park for P152 million in December 2021 showed a 13 percent growth in value to P171 million for the year under review. The growth in value, according to the company directors has substantially boosted the share of profits from associates.

LLR’s property portfolio is diversified through 67 percent allocation to the industrial sector, 22 percent in retail, 6 percent in office buildings and 6.2 percent residential.

In 2019 state owned and government investment agency, Botswana Development Corporation (BDC) reduced its stake in LLR from 65.8 percent to 42 percent after disposing 66.5 million shares to property investor Grit Real Estate Income, with the London Stock Exchange (LSE) listed firm upping its stake in LLR from 6.25 percent to 30 percent, making it now the second main shareholder. The acquisition of BDC’s stake in LLR by Grit was settled through share consideration, in which Grit paid for LLR shares by issuing 9.8 million shares to BDC, which equivalent to P150 million, resulting in BDC is holding a 3.1 percent shareholding in Grit.

Meanwhile LLR says improved trading conditions, a lease expiry rate of 3.2 years and lower vacancies saw the fair value of investment property increase substantially from P8 million in the prior year to P25 million for the year ended 30 June 2022. This contributed to the fair value of the investment portfolio increasing by 22 percent from P1 billion to P1.2 billion. In addition, average lease escalations of 6.7 percent and an exceptionally high portfolio occupancy rate of 99 percent supported a 5 percent increase in revenue to P108 million. Operating profit consequently increased 11 percent to P73 million with profit before tax increasing by 71 percent to P109 million from P63 million in the prior financial year.

The company’s Net asset value as at 30 June 2022 amounted to P846 million, a growth of 8 percent from the prior year’s value of P788 million. From a share price growth perspective, LLR opened its financial year trading at P2.32 per share and closed the year at P3.00 per share.

“We are pleased that the market has recognised the ongoing solid performance of LLR, as reflected in a 29% year-on-year increase in our share price. As a result of the pandemic, most real estate companies traded at a discount to net asset value. This rerating fairly values LLR as we are now trading equal to net asset value, allowing for an optimal capital structure and manoeuvrability”, says LLR Chief Executive Kamogelo Mowaneng.

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