| Thu 16 Feb 2006, 12:40 | | Hospitality Property Fund lists on the JSE today |
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HPA
HPA
Hospitality Property Fund lists on the JSE today
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")
Media Release
16 February 2006
Hospitality Property Fund lists on the JSE today
South Africa"s first specialised listed property fund invested exclusively in
hotels and resorts, Hospitality Property Fund, lists on the JSE today.
Hospitality is jointly promoted by Grapnel Property Group, which has assets in
excess of R4 billion under management, including blue chip property unit trust
Sycom, and Horwath Tourism and Leisure Consulting.
The listing comes after the significantly oversubscribed private placement of
Hospitality Property Fund A and B linked units at R10 per linked unit for both
in respect of R512 million. Applications received exceeded R3,9 billion, nearly
eight times the amount on offer.
Gerald Nelson, MD of Grapnel Property Group, attributes Hospitality"s successful
private placement to investors" search for yield and is confident that the
fund"s units will rerate after listing, which will create capital appreciation
for investors with the long term yield remaining attractive.
"Hospitality"s aggregate yield of 10,55% is extremely favourable when compared
to the listed property sector"s average forward yield of around 7,2%," notes
Nelson.
"Furthermore Hospitality will provide investors with the benefits of exposure to
both the property and the hospitality sectors in South Africa, with a split unit
structure catering for different investor profiles" points out Nelson.
Overall, the outlook for the hospitality sector is positive with tourism
identified as the fastest growing industry in South Africa, while listed
property was the top performing asset class of 2005 and has grown from a market
capitalisation of R13 billion to R60 billion in three years.
This specialised listed fund consists entirely of stock that was previously
unlisted, contributing to the overall market capitalisation of the sector. It
includes a portfolio of 16 landmark hotels, independently valued at R1,11
billion. These are Mount Grace Country House & Spa, Champagne Sports Resort,
Birchwood Executive Hotel and Conference Centre, Radisson SAS Waterfront, The
Rosebank Hotel, Hotel The Winkler, Protea Hotel Marine Port Elizabeth, Protea
Hotel Richards Bay, Protea Hotel East London and Courtyard (Sandton, Rosebank,
Eastgate, Arcadia and Cape Town), Kopanong Hotel & Conference Centre, Park Inn
Greenmarket Square.
The management of all these hotels, which were selected for inclusion in the
portfolio as a result of the successful businesses they represent, will remain
in place and the different hotels will retain their current unique identities
and branding.
Diversification in terms of geographic location, star grading, fixed and
variable income, lease expiry profile, market mix and brands were important
criteria in compiling the portfolio.
Joseph Aminzadeh of Horwath Tourism and Leisure explains that a high level of
diversification was achieved in assembling the fund, with 3-, 4-, and 5-star
hotels making up 33%, 45% and 22% of the portfolio respectively.
"In terms of market mix, patronage from the corporate and conference markets is
the most stable and the leisure market, while the cream on top, is less
predictable. As a result 68% of Hospitality"s portfolio has a corporate and
conference profile," points out Aminzadeh.
A financial year end of 30 June has been set for Hospitality which trades on the
JSE under short names `Hosp A" and `Hosp B".
In terms of structure, both Hospitality A and B linked units will distribute
99,99% of net income. Hospitality A linked units will have a lower initial yield
than the B linked units, but will have preferred claim to distributions.
The yield on the A linked units has been set at an initial annual yield of 9,8%.
Thereafter the distribution on the A linked units will grow at 5% per annum for
the first six years. After year 6, the distribution on the A linked units will
grow at the lesser of 5% per annum or CPIX.
Hospitality B linked units will receive the residual net income after settlement
of the A linked unit distribution entitlement and are anticipated to achieve an
initial annualised yield of 11,3%.
Hospitality has also created the opportunity for a broad based BEE ownership
initiative.
"The fund subscribes to the provisions of the draft Property Sector
Transformation Charter and as a part of the listing, an empowerment ownership
scheme with a black majority ownership has been set up with Nobuntu Investments
which will own 14% of A linked units at listing," explains Nelson. "This equates
to 7% of the fund"s units in issue which makes strides towards complying with
the draft charter"s five year ownership target."
Subscriptions from empowered entities in terms of the private placing result in
Hospitality"s BEE ownership component increasing to approximately 15%.
Nobuntu, a majority black-owned company, is held by Meago (Proprietary) Limited,
Khomelela Property Investments (Proprietary) Limited (37.4% each) and Grapnel
(25.2%). Meago is in turn held by BEE groups with broad business experience.
Khomelela was founded in 2004 by eight women and is an organisation dedicated to
women"s empowerment.
Ends
Issued on behalf of:
Hospitality Property Fund
Gerald Nelson
Tel. +27 (0)11 775 6424
Or
Joseph Aminzadeh
T: +27 (0)21 469 1300
By Marketing Concepts
Sandy Davey / Bronwen Noble
Tel. +27 (0)11 783 0700
C: 083 453 6668 / 082 855 4349
Date: 16/02/2006 12:40:04 PM Produced by the JSE SENS Department
