The Don Group entered into agreement to dispose of its remaining five hotel properties for a total value of 120 million rand. The hotels include one in Rosebank, Isando, two in Arcadia as well as Bruma. 

Late last year, the company announced it wanted to leave the overcrowded hotel market to focus on residential letting. It has spent more than R30m converting some of its hotels into residential units.

The company also wants to pay off debt, some of which was owed to the Industrial Development Corporation (IDC).

Don Group CEO Thabiso Tlelai announced that five properties were sold for a total of R120.5m to various companies. The properties included one in Rosebank, Johannesburg, which was sold to Calaska for R36m.

Calaska also bought a property in Arcadia, Pretoria for R19m. A property in Isando, on the East Rand, was sold to Magnacorp for R24.5m.

A property in Arcadia, Pretoria, was sold to Sentinel for R21m, while another one at Eastgate was sold to Mohamed Carim for R20m.

The group began converting its loss-making hotels into residential units last year.

In October last year, the Don Group informed shareholders it owed the IDC R70m. The corporation said the group needed to pay back its loan earlier than originally agreed if it was to convert from hospitality to residential letting.

Before the latest five sales, four properties have been sold since the decision was taken last year to get out of owning hotels.

The Don Group said in a statement that because of the high levels of competition within the travel and leisure sector in which it operated its profit margins had been negatively affected.

"(This was a result of ) the recent entry of numerous new hotels‚ as well as the expansion of existing hotels in South Africa."

The situation had become increasingly unsustainable for the company in the long term.

Source: BDLive