Hospitality Property Fund acquires Radisson Blu Gautrain hotel for R443m
Hotel-focused property loan stock company Hospitality Property Fund said on Wednesday its wholly owned subsidiary HPF Properties or Propco had successfully concluded the acquisition of Radisson Blu Gautrain hotel in Sandton for R443.385 million.
HPF Properties said it entered into a new sale agreement with Savana Property to acquire 100% of the Radisson Blu Gautrain hotel.
The acquisition is in line with the strategy of the Fund to improve the quality of its property portfolio through the acquisition of large hotel properties in major metropolitan areas with diverse source markets and strong brands.
The latest addition to the portfolio location is highly visible, directly across from the Sandton Gautrain Station on Rivonia Road, which is the main transport hub in the Sandton CBD.
“Based on its anticipated trading performance and cost of funding‚ the property is expected to be earnings enhancing for HPF‚” Hospitality Property Fund said.
This follows the cancellation of the December 14 sale agreement in which Propco said it would acquire a 78.2% share of Radisson Blu Gautrain and 53 parking bays for R346.745m from Savana Property.
The property is projected to yield approximately about 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.
Commenting on the acquisition, Gerald Nelson, CEO, Hospitality Property Fund said that the Radisson Blu Gautrain acquisition supports our strategy of adding strategically located large hotel properties to our portfolio in order to improve its overall quality.
"Having completed the acquisition of the Westin Cape Town some two years ago, we have now added two high quality properties with a book value exceeding R1 billion to our portfolio, with long term sustainable benefits for our unit holders,” said Mr. Nelson.
Radisson Blu Gautrain is made up of various sections of the sectional title scheme known as Sandton Eye and comprises 216 rooms‚ 8 eight conference facilities‚ the Central One Restaurant and Bar‚ an outdoor bar and swimming pool‚ as well as a fitness centre.
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.
The total purchase consideration will be funded by a R275m vendor consideration placement‚ the issuance of R150m secured notes and the private placement of R18.4m unsecured notes.
In February‚ Hospitality Property Fund said the A-linked unit distribution amount for the six months to December last year grew by 5% to 66.51c‚ in line with the fund's distribution structure‚ while the distribution on the B-linked unit showed an increase of 16.2% to 9.19c compared to the previous corresponding period.
The fund said industry statistics had confirmed the recovery trend in the hospitality market that had commenced about 12 months ago‚ with growth in occupancies and room rates matching levels last seen prior to the global downturn in 2008.
Hospitality owns a portfolio of 26 twenty-six hotel and resort properties valued at approximately R3,9 billion located throughout South Africa.