Property firm, Letlole La Rona (LLR) has continued to show underlying resilience and performed above expectations in the current subdued economic environment.
The company’s contractual revenue for the year ended 30 June 2018 increased by 10 percent to P80.8 million compared to the prior year’s 73.3 million, its latest financial statement reveals.
Chief Executive Officer (CEO) Chikuni Shenjere-Mutiswa said the increase in revenue came despite the lower than expected contribution from the recently acquired Watershed Property which was concluded in May 2018.
Letlole La Rona bought from Jus Posh Investments, Watershed Mall valued at P149 million. The property includes all land, buildings and improvements comprising of a fully developed retail center known as Watershed in the central district. LLR was the preferred bidder against rival New Africans Property (NAP), the dominant player in retail properties (the sector makes approximately 99 percent of its overall portfolio while the industrial sits at a negligible 1 percent). Letlole announced during the acquisition that it identified the Property as a potentially favourable investment opportunity to grow its property portfolio and to enhance returns on the Company’s equity.
Currently, the retail sector makes up 23 percent of Letlole’s overall portfolio. It has the third largest share from fourth place recorded last year. Leisure now constitute 27 percent of total property portfolio.LLR is pursuing yet another acquisition.
The CEO said the full impact of the acquired Watershed Mall will be felt in the coming years.
Further, LLR’s increase in revenue was driven by 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.
Profit before tax of P94.8 million achieved for the period under review compared positively to last year’ P88.9 million. Further, LLR’s fair value gains on investment properties were recorded at P32.1 million, growing from P24.4 million seen last year. As a result, earnings per share rose 6 percent from the 29.41 thebe in June 2017 to 31.12 thebe this financial year.
The company has a solid asset and tenant base, leading to the 25 percent year-on-year capital appreciation in market values of the underlying properties, which now stand at P930 million from P739 million during the previous reporting period.