Grapnel Property Group (Proprietary) Limited, today announced that Hospitality Property Fund Limited (Hospitality), South Africa’s first specialist listed property fund invested exclusively in hotels and resorts, would list on the JSE Limited in the ‘Financial – Real Estate Holdings and Development’ sector, on Friday, 10 February 2006.

The private placement of 23,725,930 Hospitality Property Fund A linked units and 27,531,247 B linked units at R10 per linked unit for both A and B units should raise a total of R512,571,780 if fully subscribed. The placement will take place over five days, opening on Monday, 23 January 2006 and closing on Friday, 27 January 2006.

Grapnel, which has assets in excess of R3 billion under management, including blue chip property unit trust Sycom, conceptualised the assembly and listing of a specialised hospitality-focused property fund in early 2004.

“As the fund is the first of its kind in South Africa and highly specialised, Horwath Tourism and Leisure Consulting was approached to work as co-promoter to the fund and provide a supporting role as expert hospitality and industry consultants,” says Gerald Nelson, MD of Grapnel.

A portfolio of 16 landmark hotels, independently valued at R1,11 billion, has been assembled by Grapnel for Hospitality including Mount Grace Country House & Spa, Champagne Sports Resort, Birchwood Executive Hotel and Conference Centre, Radisson Hotel Waterfront, Courtyard Hotels in Arcadia, Rosebank, Sandton, Cape Town and Eastgate and Protea Hotels East London, Port Elizabeth and Richards Bay.

“Hospitality will provide investors with the benefits of exposure to both the property and the hospitality sectors in South Africa through the ownership of a portfolio of hotels which provide diversification in terms of geographic location, star grading, fixed and variable income, lease expiry profile, market mix and brands,” points out Nelson.

Joseph Aminzadeh of Horwath Tourism and Leisure explains that the outlook for the hospitality sector is positive with tourism identified as the fastest growing industry in South Africa.

“It is one of the key drivers for economic growth and the government’s promotion of the country as a destination is increasing. Since 1994, overseas arrivals have grown by 174% and the tourism industry has won numerous international accolades and has proven to be resilient to both global and local headline events,” says Aminzadeh.

Listed property was the top performing asset class of 2005 and has grown from a market capitalisation of R13 million to R53 million in three years. It has outperformed equities, bonds and direct property ownership and there is currently strong institutional support and investor demand for listed property.

In terms of structure, both Hospitality A and B linked units will distribute 99.99% of net income. Hospitality A linked units will have a lower initial yield than the B linked units, but will have preferred claim to distributions.

The yield on the A linked units has been set at an initial annual yield of 9.8%. Thereafter the distribution on the A linked units will grow at 5% per annum for the first six years. After year 6, the distribution on the A linked units will grow at the lesser of 5% per annum or CPIX.

Hospitality B linked units will receive the residual net income after settlement of the A linked unit distribution entitlement and are anticipated to achieve an initial annualised yield of 11.3%.

Hospitality has also created the opportunity for a broad based BEE ownership initiative.

“The fund subscribes to the provisions of the draft Property Sector Transformation Charter and as a part of the listing, an empowerment ownership scheme with a black majority ownership has been set up by Nobuntu Investments which will own 14% of A linked units at listing,” explains Nelson. “This equates to 7% of the fund’s units in issue which makes strides towards complying with the draft charter’s five year ownership target.”

Nobuntu, a majority black-owned company, is owned by Meago (Proprietary) Limited, Khomelela Property Investments (Proprietary) Limited (37.4% each) and Grapnel (25.2%). Meago is owned by different BEE groups with broad business experience across different industries including property and tourism. Khomelelo was founded in 2004 by eight women and is an organisation dedicated to women’s empowerment.

A financial year end of 30 June has been set for Hospitality which will trade on the JSE under short names ‘Hosp A’ and ‘Hosp B’.

~ Ends ~

Issued on behalf of:

Hospitality Property Fund
Gerald Nelson
Tel. 011 775  6424

By Marketing Concepts
Sandy Davey / Bronwen Noble
Tel. 011 783 0700
C: 083 453 6668 / 082 855 4349