HOSPITALITY PROPERTY FUND LIMITED - Disposal of Inn On The Square (IOTS)

Disposal of Inn On The Square (“IOTS”)

HOSPITALITY PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code of B shares: HPB
ISIN for B shares: ZAE ZAE000214656 (Approved as a REIT by the JSE)
("Hospitality" or "the Fund")


DISPOSAL OF INN ON THE SQUARE ("IOTS")


1.   INTRODUCTION

      Shareholders are advised that the Board of Hospitality Property Fund Limited through its
     wholly owned subsidiary HPF Properties (Pty) Ltd ("Propco"), approved and agreed the terms
     of the disposal of its interests in IOTS to African Hotel Development Cape Town (Pty) Ltd
     ("AHDCT" or "the purchaser"), which is part of the Onomo Hotel Group, ("the Disposal" or "the
     Transaction") for a total cash consideration of R157 million ("Disposal Consideration") on 10
     October 2016.


2.   THE DISPOSAL

     The IOTS is an economy hotel located adjacent to the Greenmarket Square in the central
     business district of Cape Town and is managed by aha Hotels & Lodges ("AHA"), a subsidiary of
     the Tourvest group. IOTS consists of 165 rooms, the Dish Restaurant, the Cigar Lounge and Bar,
     a small outdoor swimming pool, as well as a small fitness centre.

     It is expected that registration of transfer of the property will take place during November
     2016 ("the effective date"), subject to the fulfilment of the conditions precedent below.

     AHA will continue to manage the property and business on behalf of AHDCT in terms of the
     current Fixed and Variable Lease Agreement ("F&V Lease") until 30 April 2017 after which the
     F&V Lease will terminate.

     The Disposal Consideration, which is receivable in cash on the effective date will be held in a
     cash account and will either be utilised by Hospitality towards future acquisitions or to settle a
     portion of the R600 million notes expiring in February 2017, either of which are better aligned
     with the overall strategy of the Fund.

     An independent valuation of the IOTS was conducted by JHI (Gensec Property Services
     Limited), who attributed a value of R106 million to the IOTS as at 30 June 2016. The Disposal
     Consideration represents a 36.8% premium to the open market value.


3.   CONDITION PRECEDENT

     The implementation of the Disposal is subject to the fulfillment by Propco, or waiver, as the
     case may be, of the written consent from Hospitality Guarantee SPV (Pty) Ltd to release the
     immovable property as a security and cancel the mortgage bonds on the immovable property.

Johannesburg
11 October 2016

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

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