Property company Letlole La Rona, which owns Railpark Mall, saw a 66% decline in profit before tax, from P119 million to P41 million, as the company's Kenyan associate company Orbit Africa Logistics, ran into troubles with a tenant of a 29,000 square metre property. Letlole acquired a 30% stake in Orbit in 2022 for $7.2 million.
According to the company's results for the year ended 30 June 2024, LLR incurred a significant impairment on a shareholder loan extended to Orbit. The loan made up the majority of the portion of LLR's investment.
The tenant in the property, who is a sole occupier, has struggled to pay rentals, causing Orbit to also struggle to pay back interest accrued on the shareholder loan from LLR.
"Due to the non-performance of the Group’s investment in Kenya, a significant non-cash expected credit loss provision amounting to P100.1 million was raised on the shareholder loan", the company told shareholders. "This resulted in the decrease in the shareholder loan from P99.2 million as of 30 June 2023 to P3.7 million as of 30 June 2024."
LLR also had to incur an impairment loss amounting to P5.5 million was recognised on the equity component of the investment. In total, LLR has reduced the value of its investment from P109 million to about P3 million.
Elsewhere on the company's results, the group's revenues clocked in at P173 million, portfolio value was at P1.9 billion, occupancy levels at 99% and collection rates at 100%.