Letlole La Rona will direct available cash towards debt repayment as it prepares for higher borrowing costs following the refinancing of facilities due to mature in December 2026.
The property group warned that its cost of debt is expected to rise materially under the new funding arrangements, adding pressure to earnings after finance costs increased 25 percent to P62 million in the year ended June 2026.
The increase in finance costs outpaced thegroup’s operating performance, with revenue rising 7 percent to P215.2 million and operating profit increasing 8 percent to P128.4 million.
“While the refinancing provides greater funding certainty, the new funding environment is expected to result in a material increase in the Group’s cost of debt,” Letlole said in its preliminary unaudited results.
The group said only the security arrangements remained to be finalised. It did not disclose the new lending rates or quantify the expected increase in borrowing costs.
During the financial year, Letlole drew P326.5 million in borrowings and repaid P252.2 million.
In its results commentary, signed by board chairman Mooketsi Maphane, the company said using available cash to repay debt would help limit the impact of higher funding costs and strengthen its balance sheet while retaining sufficient liquidity for operations and long-term growth.
The debt focus comes as linked unitholders face a sharply lower annual distribution. Total distributions fell nearly 48 percent to 6.67 thebe per linked unit from 12.76 thebe a year earlier, although Letlole did not explicitly link the reduction to its debt-repayment strategy.
The board declared a final distribution of P6.5 million, with the payout per linked unit falling to 2.27 thebe from 6.45 thebe. This followed an interim distribution of 4.40 thebe, down from 6.31 thebe in the previous year.
Letlole’s rising finance costs came despite stronger performance from its property portfolio.
Revenue increased 7 percent to P215.2 million from P201.8 million, driven by contractual rental increases across the portfolio.
Operating profit rose 8 percent to P128.4 million from P118.8 million, while occupancy and average rental collection rates remained stable at 97 percent.
The increase in finance costs, however, was about P12.3 million, exceeding the P9.6 million improvement in operating profit. This came before the further increase in borrowing costs that management expects under the refinanced facilities.
The company said it had refinanced part of its existing facilities during the year and secured additional funding from a South African lender on what it described as favourable terms to support its development pipeline.
The resulting rand-denominated borrowings generated foreign exchange losses on translation at year-end. Letlole said these were predominantly non-cash accounting movements that did not affect the portfolio’s underlying operating performance or cash-generating capacity.
With management expecting operating conditions to remain challenging in the short to medium term, including continued pressure on tenants, occupancy and rental collections, the group said its focus would be on protecting cash flow, controlling costs and pursuing selective growth opportunities.
