LLR CEO expresses confidence in local property market
Real estate giant’s Letlole La Rona (LLR) has expressed confidence in the local property market amid fears it is becoming saturated.
Speaking to Voice Money this week, the company’s Chief Executive Officer (CEO) Chikuni Shenjere-Mutiswa insisted there was still potential for growth in the market, in particular in the retail sub-sector.
Early last year, LLR sold the four hotels it owned to Cresta Marakanelo, which had previously been leasing the properties.
While this impacted on LLR’s portfolio diversity, Mutiswa maintains the business is now ‘back on track’.
Appointed to the role of CEO in May 2018, Mutiswa’s first assignment was to oversee the sale of the hotels.
Having successfully achieved this, his focus is now on growing the company above the usual practice of simply ‘delivering dividends’.
“We have managed to sell the hotels and what has now happened is that we decided to do two things. The first is to double down on the industrial property space, which is a our biggest competitive advantage. We are the largest institutional industrial investor here in Botswana,” stressed the CEO.
Secondly, Mutiswa says LLR will target the retail space, a strategy they have already started with the recent acquisition of Watershed Mall in Mahalapye.
“We are involved in developments including one retail mall here in Gaborone and we will be announcing it shortly. Previously our only retail exposure was the Blue Jacket Street in Francistown where we had a one-third partnership.”
Mutiswa further explained that as the economy develops, the key component of Botswana’s GDP comes from consumers.
“As such, there is still huge potential in the retail space!” he reiterated, downplaying the notion the country has more shopping malls than it needs.
“If you are a property investor and you stay by the sidelines and say Botswana right now is saturated in terms of the retail space, you will miss the boat because 10 years back this was also the belief.”
Additionally, Mutiswa revealed LLR plan to quit the residential space imminently.
“We have one residential unit. It consists of 42 apartments and we find that it is management intensive. That asset is valued at P43 million out of the balance sheet right now of P1 billion, which is around four percent of the total portfolio.”
Although insignificant, in terms of administration Mutiswa says the property takes up around 50 percent of the company’s time.
“It is likely we will be looking to dispose of that particular asset and we do not expect to venture back into the residential market,” stated Mutiswa, adding LLR will remain focused on industrial, retail and office space.
In relation to office space, he says they will concentrate on the new Gaborone Central Business District (CBD) ‘as that is where most businesses are moving to’.
As LLR’s portfolio continues to grow locally, Mutiswa says the organisation is now considering investment opportunities outside the country.
“If you look at the other five listed property companies, it is only LLR which doesn’t have regional exposure.”
He points out the company has made significant inroads and the expectation is to close a regional expansion transaction during the course of this year.
“It has taken a bit longer than we would have liked. In a way that is positive because in any investment, what determines the profit or return on investment is not the quality of the asset or income you get from that asset, it is the price at which you got it!” he noted.
According to Mutiswa, the company is looking at markets such as South Africa, Namibia and Zambia.