Hospitality Property Fund, SA's first hotel and resort property fund - set to list on the JSE on February 10 - has opened its private placement of units.

The private placement of 2,725- million A linked units and 2,531-million B linked units, at R10 a linked unit for both A and B units, will raise R512,5 million if fully subscribed.

The placement, which opened on Monday, closes on Thursday .

Hospitality's dual unit system is similar in structure to that offered by listed property loan stock company ApexHi Properties.

Gerald Nelson, MD of Grapnel Property Group, which conceptualised the fund, said the A unitholders would have a preferential claim to dividends with the units set at an initial yield of 9,8%.

The benchmark yield grows at 5% a year for the first six years and it gives the A unitholders first claim to any distribution. The B unitholders get the balance of the distribution. Nelson said that the B units were more risky, with higher projected yields. The A units were expected to appeal to the cautious investor, while the B units would appeal to investors with an appetite for greater risk and greater potential returns.

Hospitality has incorporated an empowerment component. Nobuntu Investments, the majority black-owned company that owns 7% of the fund's units, will own 14% of the A linked units at listing. Bruce Hutchison, a former Africa regional director of Sol Kerzner?s One&Only luxury resort group, will be CEO of the new fund.

Hospitality's portfolio includes 16 hotels worth about R1 billion.

Andre Stadler, MD of Catalyst Fund Managers, said: "The portfolio they have put together has achieved diversity, incorporating business conferencing, leisure and star-rating spread."

He said the yield was attractive relative to property sector yields.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge