Letlole La Rona Limited (LLR) says the proposed acquisition of an additional shareholding in JTTM from Botswana Railways Organisation (BRO) have been concluded with all the conditions precedent (CPs) related to the Sale of Linked Units Agreement having been finalised. The CPs included, amongst others, the approval of the transaction by the Competition and Consumer Authority.
The conclusion of the acquisition of the additional 25 percent shareholding in JTTM by the Company has resulted in JTTM now being a subsidiary of the Company, with the Company now holding a majority stake of 57.79 percent in JTTM which owns Rail Park Mall. The Company says it entered into a Property Management Agreement (the Agreement) with JTTM for oversight and management of JTTM’s Rail Park Mall. LLR will thus take over the property management services from Khumo Property Asset Management with effect from 16 November 2023.
This transaction follows the Company’s initial acquisition of 49 775 linked units (representing 32.79 percent) shareholding in JTTM in November 2021. The acquisition of the additional 25 percent stake in JTTM at P3 690.37 per linked unit is in line with JTTM’s net asset value per linked unit of P3 673.32 (31 March 2023) and translates to a total purchase price of P140 049 541.50. The purchase consideration will be settled in cash upon fulfilment of the set conditions in the Sale of Linked Units Agreement. The acquisition is funded through a debt facility and LLR’s own equity from the reinvestment of sales proceeds received from the disposal of nonperforming assets.
JTTM’s net asset value of P557 610 602 as of 31 March 2023 is derived mainly from the fair value of Railpark Mall, its sole investment property. The property was independently valued by Knight Frank Proprietary Limited at P750 830 000 as of 31 March 2023. The net asset value was therefore based on the property’s fair value less the debt amounting to P133 881 002 and net liabilities of P59 338 396 which is mainly deferred tax liability arising from the cumulative revaluation gains of the property. In line with the International Financial Reporting Standards (IFRS), at a shareholding of 57.79 percent, JTTM is classified as a subsidiary of LLR, and the financial results will therefore be consolidated into the Company’s accounts at Group level.
Since initial acquisition in 2021, JTTM has performed exceptionally well both in terms of net asset value growth and distribution yield and the Company expects to continue realising superior returns from this investment. The acquisition will result in LLR’s portfolio increase by P187. 7 million (P750 million *25 percent) at Company level and P750.8 million at Group level. Moreover, the Company says it stands to benefit from JTTM’s impressive Net Asset Value growth and high distribution yield.
“Our investment in JTTM Properties, a company which owns Rail Park Mall, (a 32, 000sqm prime commuter mall situated in the heart of Gaborone bus and taxi terminus) has continued to show strong performance, with the full impact of the acquisition being realised in the current year,” Letlole said in its results for the full year 2023. “The improvement in economic and trading conditions, investor confidence, as well as improvements in occupancy rates have resulted in higher valuations which bolstered the company’s fair value gains for the year.”
The portfolio registered a growth of 12.9 percent, and this growth was driven by the acquisition of a 30 percent stake in Orbit Africa Logistics (OAL) in Kenya, as well as increased valuations which were driven by a reduction in the capitalisation rate owing to a drop in inflation and improved investor confidence in the property market as well as the reduction in vacancy rates.