Funding hospitable growth

Posted On Tuesday, 30 October 2007 02:00 Published by eProp Commercial Property News
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Hospitality grabs Finweek directors' dealings atttention as various entities controlled by CEO Gerald Nelson and his empowerment partners sold off a large chunk of their rights to participate in the Fund's R500m rights offer

Gerald NelsonThe Hospitality Property Fund stands out from the rest of the real estate landscape on the JSE as the only company to focus exclusively on hotel and leisure properties.

Hospitality was listed in 2005 and includes investments in some of SA's iconic hotels like the Mount Grace Country House and Spa and the Radisson Hotel Waterfront in Cape Town. The cash raised in the rights offer is to be used to settle the acquisition costs of several investments as well as the expansion and refurbishment of certain existing properties over the course of the next year. The estimated total funding required in respect of these projects is approximately R750m.

Hospitality is a hybrid fund with both A- and B-linked units, representing both shares and debentures. The A-linked units have a set yield and have a priority right to dividends; the B-linked units have a right to everything else over the distribution to A-unit holders. The A units (which have a fixed yield) have come under pressure recently from the fear of rising interest rates. 

The B units, however, have been holding their ground due to the strong performance of the hotel industry. Hospitality recorded a 26% hike in profits (before debenture interest) to R95,4m in the year to June.

Last modified on Tuesday, 22 April 2014 19:01

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