| Thu 26 Jul 2007, 17:01 | | HPA / HPB - Hospitality - Announcement Regarding T |
|
HPA HPB
HPA
HPA / HPB - Hospitality - Announcement Regarding The Acquisition Of Various
Properties
HOSPITALITY PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
JSE Code for A-Linked units: HPA ISIN: ZAE000076790
JSE Code for B-Linked units: HPB ISIN: ZAE000076808
("Hospitality" or "the Fund")
ANNOUNCEMENT REGARDING THE ACQUISITION OF VARIOUS PROPERTIES
1. Introduction
Unitholders are advised that Hospitality has entered into agreements to
acquire the following properties:
- The Hazyview Hotel;
- The Hluhluwe Hotel & Safaris;
- the remaining 35% share in the originally acquired 90 sectional
title units at the Radisson Hotel Waterfront in Cape Town;
- the remaining 32% share in the Park Inn Greenmarket Square in Cape
Town;
- a newly developed extension to the Birchwood Executive Hotel &
Conference Centre, comprising 120 new hotel rooms and approximately
10 000 m2 of conference space;
collectively "the Acquisitions".
2. The Purchase Agreements
- Agreement with Sarana Hall Enterprises (Pty) Ltd to acquire the 3-
star hotel property known as the Hazyview Hotel, situated in
Hazyview, Mpumalanga. The transfer of the property is expected to be
on or about 1 August 2007. The hotel will be managed by the
Hospitality Hotel Management Company.
- Agreement with Fringe Benefit Financial Group (Pty) Ltd, Highway
Lodge CC, Ntafufu Properties CC, Angelfish Investments 21 CC, GJ
Elliot and JB Elliot, to acquire the 3-star hotel property known as
the Hluhluwe Hotel and Safaris, situated in Hluhluwe, KwaZulu-Natal.
The transfer of the property is expected to be on or about 1 August
2007. The hotel will be managed by the Hospitality Hotel Management
Company.
- Agreement with Virtigo Property 3 (Pty) Ltd to acquire the remaining
35% share in the originally acquired 90 sectional title units at the
hotel know as the Radisson Hotel Waterfront, located in Cape Town,
Western Cape. This will increase Hospitality`s shareholding in the
units to 100% of 90 units, which equates to approximately 50% of the
hotel rooms at the property. The transfer of the remaining share in
the property is expected to be on or about 15 August 2007. The hotel
is managed by the Rezidor Hotel Group.
- Agreement with Queensgate Greenmarket Square (Pty) Ltd to acquire
the remaining 32% share in the hotel know as the Park Inn
Greenmarket Square, located in Cape Town, Western Cape. This will
increase Hospitality`s shareholding in the units to 100%. The
transfer of the remaining share in the property is expected to be on
or about 15 August 2007. The hotel is managed by the Rezidor Hotel
Group.
- Agreement with the Cloversgreen Investments (Pty) Ltd to acquire the
extension to the hotel known as the Birchwood Executive Hotel &
Conference Centre, situated in Boksburg, Gauteng. The Birchwood
Executive Hotel & Conference Centre is wholly owned by Hospitality.
The transfer of the property is expected to be on or about 1 October
2007. The hotel is managed by the Birchwood Hotel Management Company
(Pty) Ltd.
3. Rationale for the Acquisitions
The Acquisitions are in line with the objective of growing the Fund in a
controlled manner through the addition of assets which further diversify
the portfolio and which have the potential to enhance unitholder returns.
The Acquisitions of the additional shares in the Radisson Hotel
Waterfront, Park Inn Greenmarket Square and the extension to the
Birchwood Executive Hotel & Conference Centre increase Hospitality`s
exposure to well performing assets that it is already invested in.
4. Consideration for the Acquisitions
The consideration for the Acquisitions is as follows:
Property Purchase price Independent
R million Valuation
R million
The Hazyview Hotel 40,5 46,5
Hluhluwe Hotel and Safaris 27,6 31,5
Radisson Hotel Waterfront (35% 22,0 27,0
of 90 units)
Park Inn Greenmarket Square 15,0 19,0
(32% remaining share)
Extension to the Birchwood 130,0 160,0
Hotel
Total 235,1 284,00
The acquisitions consideration will be settled through the utilisation of
Hospitality`s existing debt facility.
Independent valuations were conducted by JHI Real Estate, who attributed
an aggregate value of R284 million to the acquisitions. The valuations
were conducted for each of the properties on or about 30 June 2007; the
valuation for the extension to the Birchwood Hotel is effective from
1 October 2007 (the estimated date of transfer). The aggregate purchase
consideration represents a 21% discount to the open market value.
5. Financial Information Relating to the Acquisitions
The financial effects of the acquisitions on Hospitality`s earnings per
share, headline earnings per share, net asset value per share and net
tangible asset value per share for the period ended 30 June 2006 are not
significant (i.e. are less than 3%), and have therefore not been
disclosed.
6. Suspensive Conditions of the Acquisitions
All the suspensive conditions pertaining to the acquisition of The
Hazyview Hotel, Hluhluwe Hotel and Safaris, Radisson Hotel Waterfront and
Park Inn Greenmarket Square have been fulfilled. The purchase of the
expansion to the Birchwood Executive Hotel & Conference Centre is subject
to certain suspensive conditions being met.
7. Property Details
Details regarding the properties are set out below:
Property Location Sector Number Single or Vacancy
of Rooms multi by
tenanted rentable
area
The Hazyview Hazyview Hospital 92 Single 0%
Hotel ity
Hluhluwe Hotel & Hluhluwe Hospital 75 Single 0%
Safaris ity
Radisson Hotel Cape Town Hospital 90 (1) Single 0%
Waterfront ity
Park Inn Cape Town Hospital 165 (2) Single 0%
Greenmarket ity
Square
Birchwood Gauteng Hospital 120 Single 0%
Expansion ity
Notes:
1. The remaining 35% undivided share in 90 sectional title units 2. The
remaining 32% undivided share in the property.
The lease agreements for The Hazyview Hotel and Hluhluwe Hotels and
Safaris are of the Fund`s C-Corp type and are each for a period of 10
years with two further 5 year renewal options. C-Corp lease agreements
comprise approximately 50% fixed lease rental with the remainder being a
variable rental equivalent to 90% of the hotel`s EBITDA after deducting
the fixed lease portion. The fixed lease portion is set to escalate at
CPIX.
The lease on the additional shareholding to be acquired in the 90 units
at the Radisson Hotel Waterfront will be incorporated in the existing
lease agreement, which initial period ends in February 2015, with a
further nine year option period. The lease on the additional shareholding
to be acquired in the Park Inn Greenmarket Square will be incorporated in
the existing lease agreement, which initial period ends in February 2018,
with a further nine year option period. The leases escalate annually at
CPIX + 1%.
The lease on the expansion of the Birchwood Executive Hotel & Conference
Centre will be incorporated in the existing lease agreement, which
initial period ends in February 2016, with a further five year option
period. The lease escalates annually at CPIX + 2%, with a revenue linked
turnover component forecast to provide additional growth.
8. Categorisation of the Acquisitions
The acquisition of the extension to the Birchwood Executive Hotel &
Conference Centre is a Category 3 transaction in terms of the Listings
Requirements and accordingly only an announcement is required to be made.
There is no obligation in terms of the Listings Requirements for the
announcement of the acquisition of The Hazyview Hotel, Hluhluwe Hotel &
Safaris, Radisson Hotel Waterfront (35% of 90 units) and Park Inn
Greenmarket Square (32% remaining share) and the inclusion thereof is
voluntary.
Johannesburg
26 July 2007
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 26/07/2007 17:01:31 Produced by the JSE SENS Department.
