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Transaction update: Acquisition of the Radisson Blu Gautrain Hotel
Hospitality Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code for A-linked units: HPA
ISIN for A-linked units: ZAE000076790
Share code for B-linked units: HPB
ISIN for B-linked units: ZAE000076808
(“Hospitality” or “the company” or “the Fund”)
TRANSACTION UPDATE: ACQUISITION OF THE RADISSON BLU GAUTRAIN
HOTEL (“Radisson Blu Gautrain” or “the property”)
1. INTRODUCTION
Hospitality unitholders are referred to the company’s
announcement released on SENS on 18 December 2012 and
published in the press on 19 December 2012 to the effect
that HPF Properties (Pty) Ltd (“Propco”) a wholly owned
subsidiary of Hospitality, had entered into a Sale
Agreement (“the Sale Agreement”) with Savana Property (Pty)
Ltd (“Savana” or “the seller”) on 14 December 2012 to
acquire a 78,2% share of Radisson Blu Gautrain and 53
parking bays for a combined purchase consideration of
R346,745 million (three hundred and forty six million seven
hundred and forty five thousand rand) (“the acquisition”).
Radisson Blu Gautrain is made up of various sections of the
sectional title scheme known as Sandton Eye and comprises
216 rooms, 8 conference facilities, the Central One
Restaurant and Bar, an outdoor bar and swimming pool, as
well as a fitness centre.
2. TRANSACTION UPDATE
Propco has subsequently cancelled the Sale Agreement and
has entered into a new sale agreement dated 9 April 2013
(“the revised Sale Agreement”) with Savana, to acquire 100%
of the Radisson Blu Gautrain for a total purchase
consideration of R443,385 million (four hundred and forty
three million three hundred and eighty five thousand rand)
(“the revised acquisition”).
Based on its anticipated trading performance and cost of
funding, the property is expected to be earnings enhancing
for HPF. The property is projected to yield approximately
8.15% in year one with growth in rental for year two
expected to be approximately 15%. This growth is
underpinned by a limited rental guarantee from the seller
for the first two years of trading following registration
of transfer.
3. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects of the revised acquisition
on HPF earnings per linked unit, headline earnings per
linked unit, net asset value per linked unit and net
tangible asset value per linked unit for the interim period
ended 31 December 2012 remains insignificant (less than 3%)
and have therefore not been disclosed.
4. CONDITIONS PRECEDENT
Subject to the necessary bank guarantees being issued, the
conditions precedent to the revised acquisition have all
been fulfilled and registration of the property is expected
during May 2013 (“the effective date”).
5. FUNDING
The total purchase consideration will be funded by a R275
million vendor consideration placement, the issuance of
R150 million secured notes and the private placement of
Rm18,4 million unsecured notes.
6. VENDOR CONSIDERATION PLACEMENT
Hospitality will issue 12 476 139 HPA and 12 476 139 HPB
linked units as a vendor consideration placement, in-line
with the general authority granted at the annual general
meeting held on 21 September 2012 and which expires at the
next annual general meeting of the Company.
The linked units will be issued at a discount of 3% to the
30 day VWAP up to and including 28 March 2013 resulting in
an issue price of R16.65 and R5.39 per HPA and HPB linked
units respectively.
7. DOMESTIC MEDIUM-TERM NOTE (“DMTN”) PROGRAMME
Hospitality has registered a R2 billion DMTN Programme with
the intention over time of diversifying a portion of its
funding from generic bank debt into the debt capital
markets. Rand Merchant Bank (a division of FirstRand Bank
Limited) was appointed as advisor and transactional
bookrunner.
On 10 April 2013, Hospitality concluded its debut auction
of R150 million secured notes and a private placement of
R120 million unsecured notes into the market.
The secured notes carry a specific rating of A(za)(sf) from
Global Credit Rating Co. and the R150 million on offer was
oversubscribed to the extent of R395 million bids. The
margin for this 3 year note was closed out at 3 month Jibar
plus 182bps.
The unsecured notes were placed at a margin over 3 month
Jibar of 240bps for R40 million at 2 years maturity and
270bps for R80 million at 3 years.
8. PROPERTY SPECIFIC INFORMATION
Details of the Radisson Blu Gautrain, including property
description, property address, region, sector, number of
rooms, purchase price and the valuation, effective as at 1
December 2012, attributed to Radisson Blu Gautrain by
Gensec Property Service Limited (trading as JHI) (who are
independent valuers registered as professional associate
valuers in terms of the Property Valuers Profession Act,
No. 47 of 2000), are as follows:
Property address: Corner of Rivonia Road
and West Street, Sandton
2196 Johannesburg, South
Africa
Region: Gauteng
Sector: Hospitality
Number of rooms: 216
Purchase price (R’000): 443,385
Valuation (R’000): 441,000#
Estimated transfer costs(R’000): 850*
*includes valuation, legal and transfer costs
#100% of Radission Blu Gautrain
Johannesburg
17 April 2013
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 17/04/2013 12:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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