LLR readying to absorb market shocks
Property investment company, Letlole La Rona continues to find investment opportunities in various property sectors in Africa to achieve competitive returns. Commenting on the published results, LLR Chief Executive Officer Paul More said LLR will target sectors and markets in the continent and this will be informed by potential revenue and capital growth to be generated. “LLR will also target acquisitions that come with tenants of competitive covenant strength on long leases, as this will not only guarantee occupation, but also real growth in income through predetermined escalations,” said More.
He said the company continues to explore deals in the market with a view to creating diversified and efficient portfolio which could survive market shocks. LLR portfolio comprises 44 percent industrial, 34 percent leisure, 10 percent retail, seven percent office and three percent residential. In its year ended June 2017, LLR recorded 20 percent increase in profit to P63.8 million compared to P53 .2 million recorded in 2016.
More said the growth is primarily due to increased revenues including income of P6.3 million from the newly acquired investment in NBC as well as continued focus on creating operating efficiencies. Contractual rental revenue for the year ended 30 June 2017 was P75.9 million which is 13 percent increase from the prior year. “This growth was largely driven by effective management of vacancies, compounded annual escalations which are embedded in the lease agreements as well as rentals from Red Square,” stated More.
He said the company continues to enjoy capital appreciation of its portfolio because of its solid asset base. The company’s investment properties inclusive of operating lease assets are currently recorded at P739.4 million compared to previous year’s P710.1 million. LLR is the largest investor in industrial and hotel space of the Botswana Stock Exchange-listed property funds and these sectors have been resilient despite the current challenging trading environment. “Management is proactive in ensuring that vacancy levels are low and at close of the current financial year, vacancy rate for industrial and commercial portfolio was insignificant sitting at one percent,” said More. The gross yield for LLR portfolio for 2017 is 10 percent.