RDC moves to develop a lucrative hotel in JHB CBD
By Aubrey Lute
Botswana Stock Exchange (BSE) listed real estate group RDC Properties Limited will by early 2021 own an over 220 beds space lucrative hotel facility in the heart of one o Johannesburg elites centers. The company disclosed in a statement on Thursday.
Speaking alongside announcement of their unaudited financial results for the period ended 30 June 2019; the company says the standout highlight of the last 6 months is the finalization of the sale and development agreement for the acquisition of a hotel in Rosebank, Johannesburg on a turnkey basis with a well-known developer, Intaprop. RDC says on or about 01 February 2021, they will be, subject to regulatory and final funding approvals, acquiring a fully operational 222-bed Hotel branded as Radisson RED on Oxford Road in the heart of Rosebank’s CBD.
The total cost of the land, development, inclusive of furniture, fittings, operating equipment is in excess of R400 million. The developer will be paid on transfer of the property anticipated to be after the opening of the hotel, earliest 01 February 2021 with RDC management having an oversight on the development process.
“We are excited by the prospect of owing a Radisson RED branded property, as it is arguably one of the prime operators worldwide and well know in RSA. The design with its contemporary feel intends to put “a twist on the normal to make it unforgettable”, and by being in a perfect location we are confident that it matches the company’s strategy of investing in prime properties and contributing to the improvement of the quality of life in developing countries,” said G R Giachetti, RDC Group Executive Chairman.
On the financial performance ,figures posted by RDC for the six month period ended on the financial results shows growth in both revenue and operations profit. Notably against difficult trading environments across the company’s geographical footprints revenue registered during the period went up by 12% compared to the corresponding period in 2018 to close the half year at P74 million. This resulted in a 6% increase in profit from operations.
RDC investment and property portfolio realized a 4 % hike to a half year end of P1.96 billion. For Botswana in particular the company reports that new property investment and acquisition are still at due diligence stage. “As a welcome addition to our Botswana portfolio , the retirement and frail care / step down development being envisaged in Tlokweng has obtained the building & planning approval and therefore we anticipate the company to soon break grounds on this exciting development,” revealed RDC Executive Chair.
Giachetti says the Group portfolio of properties in Cape Town, held through a 63% stake in Capitalgro, has performed exceptionally well been resilient under tough market conditions in South Africa. In rand terms Capitalgro had a 29% increase in profit before tax over the comparative period.
“The redevelopment and construction of a 5-storey office block in the vibrant and growing Woodstock corridor is still in the planning phase as we await City of Cape Town building approvals, our participation in the development company is on a 50-50 basis. A ‘turn-key’ rental enterprise will be sold to Capitalgro upon completion end-2020. Our development in the United States is proving positive as we expect pay-outs shortly.”
Across the ocean in the United States Giachetti says RDC is currently reviewing its investments in the region. He said the company has since taken a decision to retain some US Dollar exposure as hedge to the local currencies. On other markets fronts the BSE listed property outfit has been receiving challenges pertaining to regulatory approvals and sluggish economic circumstances “We are still awaiting the finalization of the land acquisitions of our properties in Namibia before starting the developments, while the economy in Mozambique is still experiencing difficulties,” said Giachetti.
However RDC Boss says the outlook is much improved as the “go ahead” to exploit the large finds in the oil and gas sector is been announced with a positive effect expected to be felt as the works progress and more substantially once the gas fields are in operation.
“The tenanting of the Xai Xai development is now staring with line shops having expressed interest in this unique centre for the area. In Zimpeto, Maputo, we expect to commence with the petrol station component of the planned convenience centre,” he said.
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Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
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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