Letlole la Rona (LLR) intends to pump over 500 million pula into new property acquisition on both the local market and neighbouring Namibia.
Chikuni Shenjere-Mutiswa, LLR Chief Executive Officer said the company plans to finance the transactions through cash anticipated from sale of its hotel properties to Cresta Marakanelo and debt funding. Though optimistic that disposing of the four hotel properties – President Hotel, Bosele Hotel, Cresta Lodge and Thapama will sail through, Shenjere-Mutiswa’s target remains to acquire new properties before the end of the company’s financial year.
“Transactions are by nature uncertain. Prospects are however very good,” said Shenjere-Mutiswa, citing that Cresta transactions will not deter plans to acquire new properties.“We are going to carry out our expansion programme,” said Shenjere-Mutiswa clarifying LLR plans if the Cresta deal does not materialise.On the local market, LLR is eyeing two industrial properties at a cost of 170 million pula and 180 million pula while in Namibia its rental and office properties stands at 250 million pula.
The LLR and Cresta Marakanelo deal has almost reached conclusion. Worth 235 million pula, the transaction is waiting for approval from Botswana Stock Exchange (BSE), Competition Authority, shareholders, unit-holders in LLR and Cresta obtaining funding for the property.
LLR is being pushed to make the sale ahead of its lease agreement with Cresta Marakanelo lapses in June 2020 to avoid huge write down on the assets and potential to reduce ability to pay dividends to shareholders. Shenjere-Mutiswa said inability to pay healthy dividends will raise ‘question marks on our rationale for existence’.
“We are a property income fund institution associated with stable dividend and guaranteed income on a monthly basis,” said Shenjere-Mutiswa highlighting that LLR is not prepared to keep the hotels at a variable rental structure.“The variable rental structure won’t work for us,” he said.