The Fund's units in issue comprise A- and B-linked units with A-linked units having a preferential claim to earnings with capped growth, while the B-linked units receive the balance of earnings.

The group said A-linked units' annual distribution of 110 76 cents grew by 5% over the previous year, in line with the Fund's distribution structure, while distributions in respect of the B-linked unit declined by 8.1% to 152.65 cents over the 12-month period.

"The effect of the global financial crisis that is being felt across all sectors of the South African economy has become particularly evident in the hospitality sector since the latter part of last year.

"According to the Smith Travel Research Global Hotel Benchmark report, average occupancies in South Africa for the first six months of 2009 declined by 13.5% compared to the same period in 2008," it said.

"A similar decline in occupancies experienced by the Fund has resulted in lower distributable earnings being achieved. While the A-linked units' distribution for the year remained unaffected, the decrease in the Fund's distributable earnings has had a leveraged effect on the B-linked units' distribution," the group added.

Hospitality Property Fund said that as a result of deteriorating trading conditions in the second half of the year the total distributable earnings declined by 15.7% compared to the same period in 2008.

The group said that a number of initiatives had been implemented to restructure business units to address declining operating profits.

It advised that Hospitality has reached an agreement with the shareholders of Hospitality Manco, being Grapnel Property Asset Manager and Hotel Tourism and Leisure Asset Management, to acquire all of the issued shares of and shareholders' claims against Hospitality Manco.