Takeover target Hospitality Property Fund’s total distribution per linked unit fell 7.7% in the year to June, with the company blaming weak economic growth, incorrect perceptions about Ebola and new visa rules on the performance.

Hospitality has been a weak performer in the listed property sector for the past couple of years. Hotel and gaming group Tsogo Sun is in talks to buy a significant stake in the fund.

Hospitality uses both an A- and B-linked unit capital structure. The Alinked units have a preferential claim to earnings with capped growth at the lower of the consumer price index or 5% per annum. B unit holders receive the rest of the regular distributions.

In the year to June, the fund declared a distribution of 161.36c compared with the previous year, comprising an A-linked unit distribution of 148.21c, which was up 4.9%, and a B-linked unit distribution of 13.15c, which was down 60.7%.

Acting CEO Gerald Nelson said Hospitality’s performance was largely driven by the overall performance of the hospitality sector in SA.

“Trading conditions in the hotel industry over the past year remained challenging due to subdued domestic economic growth, reduced foreign tourism volumes as a result of the perceived risk of travelling to SA during the outbreak of Ebola elsewhere in Africa and the implementation of the new South African visa requirement.”

Source: BD