Company looks beyond borders; with a profit of P94.8 m
Just like many other sectors of the economy, the property market is said to have been under-strained over the last three or four years.
Chief Executive Officer of Letlole La Rona (LLR), Chinkuni Shenjere-Mutiswa told this publication on Monday after his company presented its financial results for the year ended 30 June, 2018.
Mutiswa, with nearly two decades of global investment experience and armed with a Masters in Finance from London Business School, was appointed CEO of LLR in May this year.
After presenting to stakeholders the financial performance of company over the past year, the new man in charge of the listed variable rate loan stock company shared with this publication his views on the local property market as well as future plans for the company.
“We have seen banks slowing down their lending and housing prices particularly on the lower bracket of the residential market going for 10 percent or 20 percent under the original asking price,” said Mutiswa.
Mutiswa said at the same time there has been a significant shift in the commercial space as tenants depart old areas around the Main Mall to the new posh CBD.
“So as a result of that rentals have not moved essentially at levels seen five years ago,” said Mutiswa, adding that this is an environment where escalations are between 6 percent and 8 percent.
He said on the hospitality front, the number of new hospitality projects has pressured existing operators on their rentals.
“We have been very fortunate; we have managed to weather that and our most recent results indicate a 10 percent growth of bottom line and 7 percent of profit before tax,” Mutiswa said, adding that the results are fairly commendable when one considers that local inflation has been hovering around the 3 percent territory.
Turning to the company’s future plans, Mutiswa said LLR has been very focused in Botswana, and says though the company has done well here, to grow the business and increase the distribution to the shareholders there will be a need to look beyond the borders.
“So over the next 12, 24, 36 months, that is where we really going to be focusing our attention on,” he said, and was quick to clarify that they are not ignoring Botswana, but in fact are doubling down if something comes up.
Mutiswa said they are currently working on a landmark iconic project in the new CBD in Gaborone, and will also have interest in a real estate project in the Okavango Delta.
“So we are very upbeat about real estate opportunities in Botswana. Right now we are on the unfavorable end of the cycle but that will pass and during this time LLR is looking for opportunities and at the same time really expanding into the region.
For the past year, LLR raked in profit before tax amounting to P94.8 million compared to the previous year’s P88.9 million which reflects a 7 percent increase.
Contractual revenue increased by 10 percent to P80.8 million compared to the prior year’s P73.3 million and the increase is said to have come despite the lower-than-expected contribution from Watershed property situated in Mahalapye. LLR completed the acquisition of the property in May this year.
The increase in top line is attributed to annual escalations upon renewal of existing leases, management’s ability to negotiate better rentals and maintaining voids at a very low level of 0.73 percent of gross lettable space.
Diversity in property portfolio is said to have helped the company to consistently deliver positive results in both financial performance and operational metrics. Its property portfolio is spread across a number of sub-sectors such as hotels, office, industrial, residential and retail.