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HOSPITALITY PROPERTY FUND LIMITED - Trading statement

Release Date: 25/05/2015 16:42
Code(s): HPA HPB     PDF:  
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Trading statement

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 of B-linked units: HPB
ISIN for B-linked units: ZAE000076808
("Hospitality" or "the Company")

TRADING STATEMENT

In terms of the Listings Requirements of the JSE Limited,
property entities are required to publish a trading
statement as soon as they are satisfied that a reasonable
degree of certainty exists that the distribution for the
next distribution period, will differ by at least 15% from
that of the previous corresponding period or from a profit
forecast previously provided to the market, in relation to
such period.

The combined distribution for the 6 months to 30 June 2015
("the period") was forecast at 92.15 cents made up of 75.10
cents per A-linked unit and 17.05 cents per B-linked unit.
This forecast ("the forecast") forms the baseline for the
purpose of this trading statement.

Trading conditions in the hotel sector remain challenging
with occupancy levels relatively static and average daily
rates ("ADR") growing slightly ahead of inflation.
According to the latest STR Global South Africa Hotel
Review (July 2014 to March 2015), the industry recorded
occupancy growth of 0.7% to 64.2%, ADR increased by 5.9% to
R1 059 resulting in RevPar growth of 6.7% to R680 for the
nine months ended 31 March 2015.

Hospitality’s trading for the core portfolio which is
subject to variable rental income, and excluding conference
hotels (hotels where the revenue generated by conferencing
exceeds rooms revenue), was largely in-line with the
overall hotel and leisure market. Occupancy increased by
0.4% to 67,5% and ADR increased by 5,1% to R1 359 resulting
in RevPar growth of 5,5% to R917 for the nine months ended
31 March 2015. However, the non-core portfolio and
conferencing hotels in particular showed poor results.

As a result, the trading performance for the Company was
weaker than expected when compared to the forecast.The
volatility of conference business, in particular the fall-
off of government business, has had a major negative impact
on the performance of the Birchwood Hotel and OR Tambo
Conference Centre and Mount Grace Hotel & Spa. Due to the
decline in revenue, the current fixed overheads at these
hotels are being reviewed by the hotel operators.

While there has been a significant decline in public sector
spending across the portfolio, this was partly offset by
strong performances of the Company’s Cape Town properties,
mainly The Westin and Radisson Blu Waterfront.

The combined distribution for the period is expected to be
at least 16.7% or 15.35cpu lower than the forecast,
representing an expected combined distribution of 76.81
cents. The A-linked unit distribution is likely to be in
line with the Company’s distribution policy, at 75.10 cents
per A-linked unit and the B-linked unit distribution is
expected to be at least 90% or 15.35cpu lower than
forecast, representing an expected distribution of 1.71
cents per B-linked unit.

There is currently insufficient certainty to enable
Hospitality to provide specific guidance on the expected
combined distribution for the period and it is anticipated
that the Company will publish a further trading statement
closer to the release of its results for the year ended 30
June 2015.

The forecast financial information on which this trading
statement is based has not been reviewed and reported on by
the Company’s auditors.

Johannesburg
25 May 2015

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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