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HPA HPB
HPA
HPA / HPB - Hospitality Property Fund Limited - Announcement regarding the
Acquisition of the Protea Hotel Edward, Durban
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 THE PROTEA HOTEL EDWARD, DURBAN
1 INTRODUCTION
Linked unitholders are advised that HPF Properties (Pty) Ltd ("the purchaser"),
a wholly owned subsidiary of Hospitality, has entered into an agreement ("the
agreement") to acquire the 4-star hotel known as "Protea Hotel Edward" ("the
Hotel") from Protea Hospitality Group (Pty) Ltd ("Protea") and its wholly owned
subsidiary, Swanvest 258 (Pty) Ltd ("Swanvest") for a total purchase
consideration of R110.4 million ("the consideration") ("the acquisition"). The
Hotel is located at 149 O.R. Tambo Parade, approximately 50 metres from Durban`s
main beach and one kilometre from Durban`s city centre. Protea will continue to
operate the Hotel in terms of the lease referred to in paragraph 4 below.
The acquisition is a Category 2 transaction for the purposes of the JSE Limited
Listings Requirements ("the JSE Listing Requirements") and this announcement is
published in accordance with such requirements.
2 THE ACQUISITION
2.1 Rationale
The acquisition of this hotel, located on Durban`s beachfront, is in line with
the Fund`s objective of growing its investment portfolio in a controlled manner
through the addition of quality assets which will further diversify the
portfolio and which have the potential to enhance unitholder returns.
2.2 Terms of the acquisition
The Hotel will be acquired as a going concern. The consideration will be settled
either by debt financing or by a vendor placing of the Fund`s units in terms of
the specific authority granted by shareholders at the Fund`s annual general
meeting held on 30 October 2009, whereby such number of unissued "A" and "B"
shared were placed under the control of the directors to allot and issue,
subject to the Companies Act, 1973 ("the Companies Act"), the Fund`s articles of
association and the JSE Listings Requirements, to settle a maximum purchase
consideration of Rm111, or a combination of both.
The acquisition will be effective from transfer of the Hotel to the purchaser
which is expected to be during May 2010, subject to fulfilment of the Conditions
Precedent referred to in paragraph 3 below.
2.3 Valuation
An independent valuation of the Hotel was conducted by JHI Real Estate (who are
registered as professional associate valuers in terms of the Property Valuers
Profession Act, No. 47 of 2000), who attributed a value of R114 million to the
Hotel as at 31 October 2009. The consideration represents a 3% discount to the
open market value.
3. CONDITIONS PRECEDENT
The implementation of the agreement is subject to -
- the approval of Protea, as the sole shareholder of Swanvest, to the sale of
the Hotel letting business in terms of Section 228 of the Companies Act,
and such special resolution being registered with CIPRO; and
- the conveyancers attending to the transfer providing a certificate
confirming that there are no impediments regarding the prior acquisition of
the Hotel by Swanvest.
4. PROPERTY DETAILS
Details regarding the Hotel are set out below:
Property Location Sector Number Single or Vacancy by
of rooms Multi rentable
Tenanted area
Protea 149 O.R. Hospitality 101 Single 0%
Hotel Tambo
Edward Parade,
Durban,
Kwazulu
Natal
A lease agreement has been entered into with Protea comprising an approximately
50% fixed lease rental with the remaining 50% being a variable rental dependent
on operational performance. The fixed lease portion is set to escalate annually
at CPI.
The financial effects of the acquisition are not significant.
Johannesburg
9 March 2010
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Attorneys
MKHABELA HUNTLEY ADEKEYE Inc
Date: 09/03/2010 15:32:01 Produced by the JSE SENS Department.
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