| Mon 18 Dec 2006, 17:10 | | HPA - Hospitality Property Fund Limited - Announce |
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HPA HPB
HPA
HPA - Hospitality Property Fund Limited - Announcement regarding the
acquisition of various hotels and Hospitality`s further Black
Economic Empowerment Initiatives
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 hotels and Hospitality`s
further Black Economic Empowerment Initiatives
1 Introduction
Unitholders are advised that Hospitality has entered into agreements
to acquire the following properties:
- The Richards Hotel
- The Bayshore Hotel
- The Protea Hotel Imperial
collectively "The Acquisitions".
The Acquisitions consideration will be settled by the issue of an
equal number of "A" and "B" Hospitality linked units which together
with the linked units issued as consideration for the acquisition of
the Protea Hotel Victora Junction (announced on 12 October 2006),
will be renounced by the vendors in favour of Nobuntu Investments II
(Pty) Limited ("Nobuntu II") to further enhance Hospitality`s black
economic empowerment ("BEE") ownership credentials.
2 The Purchase Agreements
- Agreement with the Richards Hotel CC to acquire the 4-star hotel
property known as the Richards Hotel, situated in Richards Bay. In
addition to the hotel the adjacent land (portion 35 and 36 of the
remainder of Erf 2627) totalling 12,960 m2, was purchased from the
same entity. The acquisition is effective from the date of transfer
of the property which is expected to be in February 2007.
- Agreement with the Bayshore Hotel CC to acquire the 2-star hotel
property known as the Bayshore Hotel, situated in Richards Bay. The
acquisition is effective from the date of transfer of the property
which is expected to be in February 2007.
- Agreement with the Prince Imperial (Pty) Limited and Imperial Trust
to acquire the 3-star hotel property known as Protea Hotel Imperial,
situated in Pietermaritzburg. The acquisition is effective from the
date of transfer of the property which is expected to be in February
2007.
Further to the announcement of 12 October 2006, the transfer of Protea
Hotel Victoria Junction has been delayed and is expected to be transferred
during January 2007.
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.
4 Consideration for The Acquisitions
The consideration for The Acquisitions is as follows:
Property Purchase
price Valuation
R million R million
The Richards Hotel and adjacent 61,8 67,1
land
The Bayshore Hotel 12,0 20,7
Protea Hotel Imperial 23,9 31,2
Total 97,7 119,0
The purchase price for The Acquisitions will be settled by the issue
of 4 548 592 "A" linked units and 4 548 592 "B" linked units at 1
087,44 cpu and 1 059,84 cpu respectively, which represents an 8%
discount to 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 Acquisitions by the board
on 11 October 2006.
An independent valuation was conducted by JHI Real Estate, who
attributed a value of R 119,0 million to The Acquisitions as at 1
December 2006. The purchase consideration represents an 18% discount
to the open market value.
5 Consideration for the Protea Hotel Victoria Junction acquisition
Further to the announcement on 12 October 2006, unitholders are
advised that the purchase price has increased from R105 million to
R106,6 million as a consequence of the purchase of an additional unit
in the hotel and will be settled by the issue of 4 964 420 "A" linked
units and 4 964 420 "B" linked units at 1 087,44 cpu and 1 059,84 cpu
respectively, which represents an 8% discount to 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 on 10 October 2006.
6 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, and have therefore not been disclosed.
Forecast information in respect of these acquisitions for the four
and a half months ending 30 June 2007 and the twelve months ending 30
June 2008 is set out below. The forecast financial information has
not been reviewed or reported on by the accountants.
Description Forecast Uncontracte Forecast Uncontracte
for the d revenue for the d revenue
four and as a % of year as a % of
a half the total ending the total
months revenue 30 June revenue
ending 2008(1)
30 June
2007(1)
R`000 % R`000 %
Revenue
- The
Richards
Hotel and
adjacent land 2,579 0 7,374 0
- The
Bayshore
Hotel 856 0 2,447 0
- Protea
Hotel
Imperial 1,343 0 3,462 0
Total Revenue 4,779 0 13,283 0
Operational
net income
- The
Richards
Hotel and
adjacent land 2,579 0 7,374 0
- The
Bayshore
Hotel 856 0 2,447 0
- Protea
Hotel
Imperial 1,343 0 3,462 0
Total
Operational
Income 4,779 0 13,283 0
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.
7 Suspensive conditions of The Acquisitions
All the suspensive conditions pertaining to the acquisition of the
Richards Hotel (including the adjacent land) and the Bayshore Hotel
have been fulfilled. The purchase of the Protea Hotel Imperial is
subject to certain suspensive conditions being met.
8 Property details
Details regarding the properties are set out below:
Property Location Sector Number of Single or Vacancy
rooms multi by
tenanted rentable
area
The Richards Bay Hospitality 135 Single 0%
Richards
Hotel
The Richards Bay Hospitality 102 Single 0%
Bayshore
Hotel
Protea Pietermaritzburg Hospitality 70 Single 0%
Hotel
Imperial
The lease agreements 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.
9 Categorisation of The Acquisitions
The Acquisitions are collectively a Category 3 transaction in terms of the
Listings Requirements of the JSE Limited.
10 The BEE Transaction
Hospitality subscribes to the provisions of the Property Sector
Transformation Charter. The facilitation of the above transactions, by the
issue of "A" and "B" linked units to Nobuntu II, forms part of the
implementation of Hospitality`s overall BEE Initiative and its objective
of introducing meaningful participation by Historically Disadvantaged
South Africans ("HDSAs") to the Listed Property Sector.
Nobuntu II will effectively acquire 9 513 012 new "A" linked units and 9
513 012 new "B" linked units in Hospitality, which once issued will equate
to 20.8% of the total "A" and "B" linked units. Together with the original
Nobuntu transaction initiated at the time of Hospitality`s listing, the
Fund`s BEE ownership will now equate to 25% of units in issue.
Nobuntu II is a majority black-owned company, which has been established
for the purpose of facilitating the BEE transaction. The shareholder`s of
Nobuntu II are:
Shareholder Shareholding
(%)
Meago Trading (Pty) Limited 49,9
Grapnel Property Group (Pty) Limited 25,2
Bustque 279 (Pty) Limited (a wholly-owned
subsidiary of Pan-African Capital
Holdings (Pty) Limited) 17,4
Morgan West Structured Investments
Limited 7,5
Johannesburg
18 December 2006
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 18/12/2006 17:10:07 Produced by the JSE SENS Department.
