| Fri 20 Jan 2006, 17:47 | | Hospitality Property Fund Limited - Abridged Prosp |
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JSE
JSE
Hospitality Property Fund Limited - Abridged Prospectus for Hospitality Property
Fund Limited
Hospitality Property Fund Limited
(formerly Vizirama 165 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
JSE code for A linked units: HPA ISIN: for A linked units ZAE000076790
JSE code for B linked units: HPB ISIN: for B linked units ZAE000076808
("Hospitality" or "the Company" or "the fund")
Abridged Prospectus, private placing in the ratio of 100 A linked units to 116
B linked units of 23 725 930 A linked units and 27 531 247 B linked units at
an offer price of R10.00 each and commencement of listing.
The JSE Limited ("JSE") has granted Hospitality a listing in respect of
Hospitality linked units, comprising 36 174 723 A linked units and 36 174 723
B linked units, in the Real Estate - "Real Estate Holdings and Development"
sector of the JSE lists under the short names "Hosp A" and "Hosp B", subject
to the conditions referred to in paragraph 9.3 below, provided that if a
lesser amount of linked units, being not less than 18 137 660 for the A linked
units and not less than 21 039 685 for the B linked units is subscribed for
("the minimum subscription"), that number of linked units will be listed. It
is anticipated that the listing will be effective as from the commencement of
trade on the JSE on Friday, 10 February 2006.
An English copy of the Prospectus, dated 16 January 2006, was registered by
the Registrar of Companies on Friday, 20 January 2006 in terms of section
155(1) of the Companies Act No 61 of 1973 as amended, ("Companies Act") which
Prospectus will be issued on 23 January 2006.
1. Introduction
The concept of a specialised hospitality industry-based property fund was
initiated in recognition of anticipated growth in the listed property and
tourism sectors. The portfolio comprises a careful selection of properties to
ensure diversification in terms of geographic spread, star grading and
business focus. Extensive modelling, based on similar hotel property fund
structures in the United States has been undertaken in structuring the fund.
This listing also facilitates a Black Economic Empowerment ownership scheme by
way of the unique structuring of the fund"s linked units.
2. History, nature of business and strategy and future prospects
2.1 History
Grapnel Fund Managers (Proprietary) Limited ("Grapnel") conceptualised the
assembly and listing of a specialised hospitality-focused property fund in
early 2004. As the fund would be the first of its kind in South Africa,
Horwath Tourism & Leisure Consulting (Proprietary) Limited ("Horwath") was
approached to work as co-promoter to the fund and provide a supporting role as
expert hospitality industry consultants.
2.2 Nature of business and strategy
The nature of Hospitality is that of an investment vehicle that provides
investors with exposure to both the property and hospitality sectors in South
Africa. This is achieved through the ownership of a portfolio of hotels which
provide diversification in terms of geographic location, star grading, fixed
and variable income, expiry profile, market mix and brands.
Hospitality"s strategy is focused on three core drivers, namely returns, risk
diversification and growth.
2.3 Future prospects
The medium to long-term objective of Hospitality is to grow the fund"s asset
base in a controlled manner which ensures enhanced liquidity, critical mass
and further risk diversification. The current robustness of the property
market, combined with the projected growth of the hospitality sector, and the
unique structure of the fund, should translate into sustainable earnings
growth for investors that exceeds the Consumer Price Index ("CPIX").
3. Salient financial information
3.1 Salient financial information on the assumption that subscription for
23 725 930 A linked units and 27 531 247 B linked units whereby a total of
R512 571 780 would be raised ("the full subscription") is obtained
Annualised
5 months 5 months 12 months
ending ending ending
30 June 30 June 30 June
2006 2006 2007
(R"000) (R"000) (R"000) (R"000)
Total carrying value
of properties 1 000 771
Total anticipated
equity and gearing
on listing 1 000 771
Total gearing
(including debentures) 967 085
Anticipated market
capitalisation
of A and B linked
units at R10.00
per linked unit 723 494
Net profit 25 053 69 892 79 436
Anticipated total actual
distribution 30 043 74 882 79 436
Net anticipated forward
yield to A linked unit
holders 3.99% 9.56% 10.04%
Net anticipated forward
yield to B linked unit
holders 4.32% 11.14% 11.92%
3.2 Net interest rates
The fund"s policy is to fix interest rates on a substantial portion of its
gearing. Initially, at least 75% of debt will be subject to fixed rates for a
period of three years, leaving at most 25% of debt prime-linked. The fund will
have a weighted average cost of debt of 9.14% on listing.
4. The property portfolio
Details of the property portfolio are set out in the Prospectus copies of
which are available as set out in paragraph 10 below and comprises interests
in the following 16 properties:
Birchwood Executive Hotel and Conference Centre, (East Rand,
Johannesburg)(3);
Courtyard Arcadia, (Pretoria)(3);
Courtyard Cape Town(3);
Courtyard Eastgate, (Johannesburg)(3);
Courtyard Rosebank, (Johannesburg)(3);
Courtyard Sandton(3);
The Winkler Hotel, (White River);
Mount Grace Country House and Spa, (Magaliesburg);
Protea Hotel Marine Port Elizabeth;
Protea Hotel Richards Bay;
The Rosebank Hotel, (Johannesburg);
Champagne Sports Resort, (Drakensburg);
Kopanong Hotel and Conference Centre, (East Rand, Johannesburg)(5);
The Park Inn Hotel, (Cape Town CBD)(4);
Protea Hotel East London; and
The Radisson Hotel Waterfront, (Cape Town)(4).
Notes:
(1) Total purchase consideration - R972 259 000
(2) Valuation by Independent Valuer - R1 107 500 000 in aggregate
(3) Co-ownerships in shareblock companies
(4) Acquisition of various undivided shares
(5) Acquisition of central facilities and 45% of sectional title accommodation
units
5. Black Economic Empowerment
The fund subscribes to the provisions of the draft Property Sector
Transformation Charter. In recognition of this and as part of the listing, an
empowerment ownership scheme with a black majority ownership through the
controlling shareholders Meago (Proprietary) Limited and Khomelela Investments
(Proprietary) Limited has been set up via Nobuntu Investments (Proprietary)
Limited which will own approximately 14% of the A linked units at listing
(approximately 7% of the fund"s units in issue) thereby making strides towards
complying with the draft Property Sector Transformation Charter"s five-year
ownership target.
6. Directors of Hospitality
The names, ages, qualifications, business addresses and occupation of the
directors of Hospitality are outlined below.
Name, age, qualification, Business address Occupation
function and nationality
Executive directors
Bruce Hutchison (56) CEO 1st Floor, Building 2,
Freestone Park Hotelier
(South African) 135 Patricia Road
Sandown, Sandton, 2196
Ridwaan Asmal (33) CFO 1st Floor, Building 2,
Freestone Park Accountant
B Comm (Accounting) 135 Patricia Road
(University of the Sandown, Sandton, 2196
Witwatersrand)
(South African)
Non-executive directors
Kamil Hussain
Abdul-Karrim* (46) 32 Leicester Road Consultant
Bcompt., PDM-PPDA Kensington, 2094
(Wits Business School)
MBA (Bond University)
(South African)
Youseph Aminzadeh (39) Dunkley House Director of companies
BA (Webster), MBA
(Trinity) 32 Barnet Street
(Dutch) Cape Town, 8010
Justin Julian Philip
Grant Bass (41) 1st Floor, Building 2 Consultant
BSc, FRICS Freestone Park,
135 Patricia Road
(British) Sandown, Sandton,
2196
Mohammed Sharif Hoosen*
(32) 32 Impala Road Corporate Financier
B.Pharm (Rhodes
University) Chislehurston
B Comm (University of
Cape Town) Sandton, 2196
B Comm (Honours)
(University of Natal),
CA(SA)
(South African)
Brenda Motsehoa
Madumise* (41) Woodmead Business Park Lawyer
B.Proc (LLB) (University
of the 145 Western Service Road
Witwatersrand), MBA Sandton, 2196
(Bond University) Woodmead
Graduate Diploma in
International
Trade Law
(University of the
Witwatersrand)
(South African)
Gerald Alan Nelson (50) 1st Floor, Building 2 Director of companies
BSc Building (University
of the Freestone Park
Witwatersrand) 135 Patricia Road
(South African) Sandown, Sandton, 2196
Timothy Edmund Sewell*
(61) 67 Central Avenue Director of companies
Chairman Illovo, 2196
B Comm, CA(SA)
(South African)
* Independent
7. Forecast financial information relating to hospitality
The information set out below has been prepared on the assumption that the
entire portfolio of properties has been transferred to Hospitality, and the
full subscription is obtained.
The forecast income statements for the five months ending 30 June 2006, the
annualised forecast income statement for the 12 months ending 30 June 2006 and
the 12 months ending 30 June 2007 are set out in the table below.
Annualised
Forecast Forecast Forecast
5 months 5 months 12 months
ending ending ending
30 June 2006 30 June 2006 30 June 2007
(R"000) (R"000) (R"000)
Revenue 47 709 110 867 116 829
Operating profit less expenses
before finance costs 42 211 98 618 103 052
Finance costs (12 168) (23 736) (23 616)
Operating profit after finance costs 30 043 74 882 79 436
Listing expenses (4 990) (4 990) -
Net profit 25 053 69 892 79 436
Distributions/Notional
distributions to linked
unit holders (30 043) (74 882) (79 436)
Net loss before taxation (4 990) ( 4 990) -
Taxation - - -
Net loss for the period/year (4 990) (4 990) -
Weighted average A linked
units in issue
on listing ("000) 36 175 36 175 36 175
Weighted average B linked
units in issue
on listing ("000) 36 175 36 175 36 175
Distribution per A linked unit (cents) 40 96 100
Distribution per B linked unit (cents) 43 111 119
Earnings per A linked unit (cents) 35 97 110
Earnings per B linked unit (cents) 35 97 110
Headline earnings per A
linked unit (cents) 35 97 110
Headline earnings per B
linked unit (cents) 35 97 110
Yield (based on distribution
to linked unit holders)
(%) - A linked units 3.99 9.56 10.04
Yield (based on distribution
to linked unit holders)
(%) - B linked units 4.32 11.14 11.92
8. Share capital and debentures
On the assumption that the full subscription is obtained the authorised and
issued share capital of Hospitality, before and after the private placing, are
as follows:
8.1 Authorised and issued share capital and debentures
(Rand)
At 30 September 2005
Authorised
1 000 ordinary shares of R1.00 each
Issued
120 ordinary shares of R1.00 each 120
After the sub-division and repurchase and increase in authorised share
capital in terms of the resolutions set out in Annexure 26 to the Prospectus
(Rand)
Authorised
200 000 000 A ordinary shares of R0.0001 each
200 000 000 B ordinary shares of R0.0001 each
Issued
51 A ordinary shares of R0.0001 each
99 B ordinary shares of R0.0001 each
After the issuing of linked units to vendors, the issue of
linked units to Nobuntu and settlement of brokers" fees and
before the private placement
(Rand)
Authorised
200 000 000 A ordinary shares of R0.0001 each 20 000
200 000 000 B ordinary shares of R0.0001 each 20 000
Issued
12 448 793 A ordinary shares of R0.0001 each 1 245
8 643 476 B ordinary shares of R0.0001 each 864
Share premium 12 653 252
12 448 793 A debentures 117 018 654
8 643 476 B debentures 81 248 674
Total 210 922 689
After the issuing of shares to vendors and the issue
of shares to Nobuntu and settlement of brokers"
fees and after the private placement
(Rand)
Authorised
200 000 000 A ordinary shares of R0.0001 each 20 000
200 000 000 B ordinary shares of R0.0001 each 20 000
Issued
36 174 723 A ordinary shares of R0.0001 each 3 617
36 174 723 B ordinary shares of R0.0001 each 3 617
Share premium less listing expenses 38 668 188
36 174 723 A debentures 340 042 396
36 174 723 B debentures 340 042 396
Total 718 752 980
9. Details of the private placement
9.1 Particulars of the private placement in terms
of the full subscription
Issue and subscription price per linked unit R10.00
Number of A linked units offered in terms
of the private placement 23 725 930
Number of B linked units offered in terms
of the private placement 27 531 247
Amount raised in terms of the private placement R512 571 780
9.2 Time and date of the opening and
closing of the private placement
2006*
Opening date of the private placement (9:00) Monday, 23 January
Closing date of the private placement (17:00) Friday, 27 January
Notification of the obtaining of the
required subscription
and individual allotment notification
(on or before 17:00) Monday, 30 January
Results of the private placement released on SENS and
published in the press on or about Wednesday, 1 February
Payment date for allotment (by 15:30) Tuesday, 7 February
Proposed listing date on the JSE Friday, 10 February
* These dates and times are subject to amendment. Any such amendment will be
released on SENS and published in the press.
9.3 Conditions to the listing
In addition to obtaining the minimum subscription, the listing is subject to
the fulfilment of the following conditions:
9.3.1 Hospitality complying with the JSE Listings Requirements regarding the
requisite spread of linked unit holders. The linked unit holder spread will be
finalised on Monday, 30 January 2006 when notification of allotment and over-
subscriptions, if applicable, takes place. Following this, the linked unit
holder spread will be provided to the JSE Issuer Services Division. The JSE
Issuer Services Division will, in turn, confirm that the requisite linked unit
holder spread is in accordance with the JSE Listings Requirements prior to the
proposed listing date of Friday, 10 February 2006;
9.3.2 Competition Authority approval, it being noted that all requisite
approvals had been obtained by the last practicable date, being Friday, 13
January 2006, other than the approval for the transfer of The Park Inn Hotel
and The Radisson Hotel Waterfront; and
9.3.3 the transfer of the properties into the name of HPF Properties
(Proprietary) Limited.
10. Further copies of the Prospectus
Copies of the Prospectus can be obtained during normal business hours from
Monday, 23 January 2006 to Friday, 10 February 2006 from Hospitality"s
registered office, 1st Floor, Building 2, Freestone Park, 135 Patricia Road,
Sandown, Sandton, or at Nedbank Capital, 3rd Floor, F Block, Corporate
Finance, 135 Rivonia Road, Sandown, Sandton, or at Horwath, Dunkley House, 32
Barnet Street, Cape Town or at Computershare Investor Services 2004
(Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg.
Sandton
20 January 2006
Investment bank and joint sponsor
NEDBANK CAPITAL
Property valuers
JHI REAL ESTATE LIMITED
Lead independent reporting accountants and auditors
and lead sponsor
KPMG
Attorneys for the acquisitions
Coetsee van Rensburg Attorneys
Corporate law advisors, competition laywers
and trustee for the debenture holders
EDWARD NATHAN
CORPORATE LAW ADVISERS
EDWARD NATHAN (Proprietary) Limited
Registration No. 2004/00565/07
Attorneys for the Prospectus
KNOWLES HUSAIN LINDSAY INC ATTORNEYS
(Registration number 2000/000004/21)
Joint promoter
grapnel PROPERTY GROUP
Reporting accountants to Birchwood
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Joint promoter and
hotel, tourism and leisure consultants
Horwath
Date: 20/01/2006 05:47:38 PM Produced by the JSE SENS Department
