Hospitality has also launched a 512.6 million rand private placement, comprising 23,725,930 Hospitality Property Fund A linked units and 27,531,247 B linked units at 10 rand per linked unit. The placement opened yesterday and will close on Friday.
A financial year end of June 30 has been set for Hospitality, which will trade on the JSE under short names 'Hosp A' and 'Hosp B', Grapnel said.
Grapnel, which has assets of over 3.0 billion rand 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 SA 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," explained Gerald Nelson, MD of Grapnel.
A portfolio of 16 landmark hotels, independently valued at 1.11 billion rand, 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," pointed out Nelson.
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 six, 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 had also created the opportunity for a broad based black economic empowerment (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," noted 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.
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