Letlole La Rona profits fall on higher vacancies
Pauline Dikuelo | Wednesday March 30, 2016 16:17
According to the group’s Chief Executive Officer, Paul More the situation is expected to improve significantly by June this year.
“Although profit for the half year declined relative to prior year, this situation is expected to improve significantly by June this year owing to management’s initiatives in efficiently managing voids and costs containment measures applied,’’ he said.
The company also saw a marginal decline in total rental income during the second half of the year to P30.6 million from P31.3 million in the same period of 2014. The drop is as a result of vacancies experienced during the period. However, the performance is anticipated to improve by year-end since tenants have been secured for the vacant units.
“LLR forged ahead in implementing sound property management principles. The escalation, encapsulated in the lease agreements, is 7.5 percent on average and guarantees the company contractual income growth in real terms. This factor has contributed to achieving a satisfactory return,” he added.
However, the CEO said the company maintained the strength of its balance sheet in terms of capital value and liquidity. Fair value gains on investment properties for the period increased the property portfolio from P622.3 million in the previous period to P637 million.
In the previous year, the company received an insurance amount of P4.4 million relating to one of the burnt down properties, which was included in other income contributing to the higher profit of P30.6 million.
The biggest LLR’s property portfolio is industrial with 47 percent followed by leisure with 39 percent and commercial with 14 percent.
“Our portfolio is skewed towards industrial and leisure properties. These sectors have been performing satisfactorily despite the current challenges faced by the property market,” More added.
LLR has embarked on an investment strategy, which involves growth coupled with diversification. The company is currently on the verge of investing in prime residential and retail property.
“The ungeared property portfolio gives LLR ample scope to strategically consider acquisition and development of property which will generate a higher turnover and by extension increased shareholders wealth,” More said.
LLR had a property portfolio providing exposure to the hotel, commercial, retail and industrial properties. Under leisure, LLR owns some buildings where Cresta Marakanelo operates from including Cresta Lodge and President Hotel in Gaborone, Thapama Hotel in Francistown and Bosele Hotel in Selibe-Phikwe.