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HPA HPB
HPA
Hospitality - Acquisition of Protea Hotel Victoria Junction, Cape Town
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 PROTEA HOTEL VICTORIA JUNCTION,
CAPE TOWN
1. Introduction
Linked unitholders are advised that Hospitality has concluded an
agreement ("the agreement") with Protea Junction (Pty) Ltd and Protea
Hotel Group (Pty) Ltd ("the sellers") to acquire the 4-star hotel
property known as the Protea Hotel Victoria Junction ("the
acquisition"). The acquisition is effective from the date of transfer
of the property which is expected to be mid November 2006. Protea
Hotels Investments (Pty) Ltd will continue to manage the hotel.
2. Rationale for the acquisition
The acquisition is in line with the Fund"s objective of growing the
asset base in a controlled manner which ensures enhanced liquidity,
critical mass and risk diversification.
3. Consideration for the acquisition
The consideration for the acquisition is R 105 million which will be
settled by the placement of an equal portion of "A" and "B"
Hospitality linked units on behalf of the vendors. The number of
units to be issued will be determined by the cost of the acquisition
divided by an amount which is not less than the lesser of:
* the 30 day VWAP (Volume Weighted Average Price) of both the "A"
and "B" Hospitality linked units for the 30 day period
immediately preceding the approval of the acquisition by the
board, discounted by up to 10% or the 3 day VWAP of the "A" and
"B" Hospitality linked units for the 3 day period immediately
preceding the placement of the linked units, discounted by up to
10%.
* Hospitality is exploring the opportunity through the
renouncement of these units, to enhance the BEE ownership of the
Fund. This will increase the BEE shareholding from its current
level of 12,5% to 22,9%. Based on current pricing, the intention
is to issue the units at an 8% discount.
An independent valuation was conducted by JHI Real Estate Limited,
who attributed a value of R 116 million to the hotel at 1 November
2006. The purchase consideration represents a 10.5% discount to the
open market value.
4. Financial information relating to the acquisition
The financial effects of the acquisition on Hospitality"s net asset
value, net tangible asset value, earnings and headline earnings per
linked unit are not material.
Forecast information for the seven and a half months ending 30 June
2007 and the twelve months ending 30 June 2008 is detailed below. The
forecast financial information has not been reviewed or reported on
by the accountants in terms of section 8 of the JSE Limited Listings
Requirements ("Listings Requirements").
Property Description Forecast Uncontracted Forecast Uncontracted
for the revenue as a for the revenue as a
seven % of the year % of the
and a total ending total
half revenue 30 June revenue
months 2008 (1)
ending
30 June % %
2007(1) R"000
R"000
Protea Revenue 6 828 0 11 370 0
Victoria
Junction Operational
net income 6 828 0 11 370
Notes:
1. Profit after tax has not been disclosed as it has been
assumed that all income before distribution will be
distributed to linked unitholders
5. Suspensive conditions of the acquisition
All the suspensive conditions pertaining to the acquisition of the
Protea Hotel Victoria Junction have been fulfilled.
6. Property details
Details regarding the properties are set out below:
Property Location Sector Gross Single Vacancy
lettable or multi by
area m2 tenanted rentable
area
Protea Somerset Hospitality 8 878 Single 0%
Hotel Road,
Victoria Cape Town
Junction (adjacent to
the
Waterfront)
The lease agreement is of the Fund"s C-Corp type and is for a period
of 20 years. 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.
7. Categorisation of the acquisition
The acquisition is a Category 3 transaction in terms of the Listings
Requirements.
Johannesburg
12 October 2006
Sponsor
Nedbank Capital
Date: 12/10/2006 03:26:08 PM Produced by the JSE SENS Department
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