Specialised Real Estate Investment Trust (Reit) Hospitality (HPA‚ HPB) posted distribution growth of 14.5% for the year to June‚ blasting growth expectations by 4%. The South African hotel industry looks to be emerging from its post-Soccer World Cup slump‚ occupancy and room-rate figures have shown in 2013 and 2014.
Distributable earnings per combined linked unit grew by 14.5% to 174.80c. The A-linked unit distribution of 141‚35c showed an increase of 5.0%‚ in line with forecast‚ and the reported distribution of the B-linked unit grew 85% to 33.45c‚ 2.6% ahead of forecast. "We are pleased with the results‚ especially the trading levels that we achieved up to the end of March 2014‚" CEO Andrew Rogers said.
"Subsequently‚ the effects of the public holidays and national elections were felt across the country‚ and while business travel is slowly picking up in the major centres‚ public sector travel continues to lag. "Net asset value per linked unit of R11.40 was achieved‚ up 4.1% from 2013. Overall occupancy levels were 61.4%‚ up 2.2% compared with average room rates increasing 14% to R1.162 and revenue per available room growth of 16.5% being achieved.
Properties in Cape Town and Sandton were the top performers. In particular The Westin Cape Town‚ the Radisson Blu Waterfront and the Radisson Blu Gautrain Hotel were strongly profitable according to Mr Rogers. "Our well-located properties in Sandton and Cape Town underpinned the Fund's rental income growth of 19.6% to R426.2m‚" Mr Rogers said.
"On a like-for-like basis‚ rental income growth for the portfolio's properties subject to variable rental income was 13.3%‚ excluding Radisson Blu Gautrain Hotel which was acquired in May 2013 and Kopanong which was previously on a fixed lease‚" he said. Analysts' reactions to the results were mixed. Meago Asset Managers director‚ Thabo Ramushu‚ said the occupancy growth was strong but came off of a low base. "The results were marginally ahead of guidance‚ but it must be noted that the performance was coming off a low base.
The fund's occupancy and average room rates were ahead of the industry even though the hospitality industry as a whole has recovered since 2011‚" he said. He was concerned that Hospitality faced difficult times in the near future. "There are however headwinds going forward‚ like the loss of income from conversion of fixed income lease to variable lease for the Birchwood Hotel and also the re-negotiation of the Champagne Sport Resorts lease in 2016 which will result in further significant negative rental reversions‚" he said.
