Letlole Ra Rona disposes its four hotels to Cresta
Real estate development and management company, Letlole La Rona, has managed to dispose four hotels under its portfolio to Cresta Marakanelo Limited as part of its diversification strategy, the Botswana Stock Exchange-listed company has announced.
Letlole Ra Rona, a subsidiary of Botswana Development Corporation Limited (BDC) said the four hotels it disposed were; Bosele Hotel, President Hotel, Cresta Lodge and Thapama Lodge, leaving it with 13 industrial properties under its portfolio; as well as Moedi House, a commercial property, Shoppers, a retail property and Red Square, a residential property. However, Letlole Ra Rona chairperson, Boitumelo Mogopa said the sale of the four hospitality properties led to a book loss for the company of P27 million. But, the sell, she said, was in line with the blue-chip company’s diversification strategy of divesting from the hospitality sector, which led to the disposal of all its hotel interests through a sale to a sitting tenant – Cresta Marakanelo.
“Letlole Ra Rona’s deliberate strategic shift to sale of the four hotels led to a book loss of P27m on this disposal while there were two additions of properties in Gaborone’s key industrial nodes at the business consolidated its lead in this sought-after sector of the market,” the chairperson said. She said the disposal of the hotels had reduced Letlole Ra Rona’s risk profile, removed exposure to a single tenant who occupied a third of its portfolio while at the same time unlocking capital to carry out its restructuring and growth path.
“The sale of the hospitality assets has seen the investment properties’ value decline from P970m to P780m. However, the company maintains a very healthy pipeline locally and regionally and shall be deploying the sale proceeds during the course of the coming financial year,” said Mogopa. She said her company was enthusiastic about the opportunities available in Botswana and beyond the country’s borders.
“It remains focused on its vision of becoming the premier real estate company with a significant presence in selected regional markets and a well-diversified portfolio underpinned by high occupancies and quality tenant covenant. With its current healthy pipeline and property management expertise, the company is in a prime position to deliver this strategy. “Going forward, the company will be looking to grow its distribution pay-out at a rate comfortably higher than Botswana’s inflation,” said Mogopa, adding Letlole Ra Rona’s strong performance above expectation continued despite the current subdued economic environment.
“A well-diversified, growing portfolio has secured the business’ cash generation ability against macro headwinds with the company consistently delivering solid financial and operational results. In addition, a well-structured balance sheet and funding strategy has afforded Letlole Ra Rona flexibility to swiftly seize opportunities as they arise.
“Testimony to this is the fact that over, the two years, Letlole Ra Rona has been involved in four of the five largest property transactions in Botswana. As a result, operating property increased 22 percent net cash while operating activities grew by 16 percent. With tighter working capital, management and improved cash collections resulted in core cash resources ending the year at P44.6m, significantly higher than the P34.5m at the end of the previous financial year,” said Mogopa.
She said the total revenue for the company for the year-ending 30 June 2019 reflected a 28 percent growth from the prior year figure of P82m. “The increase was underpinned by a full year contribution of Watershed Mall (now accounting circa 12 percent of total revenues). This asset came into the portfolio at the tail-end of the 2018 financial year. Annual rental escalations averaging 7.5 percent underscore the quality of portfolio which was enhanced by the purchase of newly developed, fully tenanted warehouses in Gaborone’s Block 3,” said Mogopa. Letlole Ra Rona is owned in majority by the government investment arm, BDC with a stake of 65.8 percent followed by Botswana Public Officers Pension Fund (BPOPF) with a 6.71 percent shareholding.
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Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive
Moody’s Investors Service (“Moody’s”) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.
Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base – that has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.
The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.
With the change in outlook to “positive”, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from here
Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: “This positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least “AA”/Stable rating by both Moody’s and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.”
ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.
About The African Trade Insurance Agency
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s, and in 2019, ATI obtained an A3/Stable rating from Moody’s, which has now been revised to A3/Positive.