| Thu 10 Dec 2009, 15:49 | | HPA / HPB - Hospitality Property Fund Limited - Trading Statement |
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HPA HPB
HPA
HPA / HPB - Hospitality Property Fund Limited - Trading Statement
HOSPITALITY PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code for A-linked units: HPA
ISIN for A-linked units: ZAE000076790
Share code of B-linked units: HPB
ISIN for B-linked units: ZAE000076808
("Hospitality" or "the Company" or "the Fund")
TRADING STATEMENT
In terms of the Listings Requirements of the JSE Limited, property entities are
required to publish a trading statement as soon as they are reasonably certain
that the distribution for the next distribution period will differ by at least
15% from that of the previous corresponding period.
As noted in the Fund`s June 2009 results announcement, "A continuing
recessionary environment, budgetary constraints in the corporate and government
sectors as well as limited personal disposable income is likely to result in
continuing pressure on both occupancies and average room rates for the remainder
of 2009". The operating performance of the South African hotel industry has
deteriorated significantly from July to November 2009 when compared to the same
period in 2008. The latest STR Global HotelBenchmark statistics for the period
July to October 2009, indicate that occupancies over this period have declined
some 14.2%, with average daily room rates decreasing by 0.5%, resulting in a
drop of 14.6% in revenue per available room. The hotels in which Hospitality is
exposed to variable rental income from operational earnings have followed a
similar trend, resulting in lower rentals being received. Over the same period,
staff and supplier costs have increased by 6% to 8%, which has further eroded
profitability. Although operating expenses were reduced in anticipation of lower
business volumes, certain fixed expenses including rates and electricity have
increased significantly year on year.
Based on information currently available the directors expect the total
distribution per linked unit for the six months to December 2009 to be between
30% and 40% lower than the distribution for the corresponding period in the
previous year. Unitholders are reminded that the Fund`s units in issue comprise
A- and B- linked units, with A-linked units having a preferential claim to
earnings with year-on-year growth of 5% per linked unit for the current
reporting period. The B-linked units receive the balance of the earnings and due
to the leveraging effect of the A-linked unit earnings growth, distributions per
B-linked unit are expected to be between 55% and 65% down on the previous
corresponding period.
The short term outlook for the industry remains challenging. While Government
and corporate travel and conferencing volumes remain substantially below
historic levels, forward bookings suggest that demand should pick up from
February 2010. Foreign leisure travel is likely to remain depressed in the early
part of next year, while the FIFA World Cup 2010, which straddles the Fund`s
year-end, will provide a much needed boost to hotel profits. Most of the Fund`s
hotels have already contracted to major clients for the full period of the
event. The aim will be to ensure that maximum benefit is derived pre and post
the World Cup period. The medium to long term outlook for the industry remains
positive.
The distribution forecast has not been reviewed or reported on by the Company`s
auditors. Hospitality`s interim results for the six months to 31 December 2009
are expected to be published towards the latter part of February 2010.
Johannesburg
10 December 2009
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 10/12/2009 15:49:58 Produced by the JSE SENS Department.
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