Hospitality Property Fund seeks to improve the quality of its portfolio

Hospitality Property Fund CEO Gerald Nelson said the fund achieved positive year-on-year growth in distributions, benefiting from the improving hospitality business environment, and after weathering extremely tough industry-wide operating conditions.

Hospitality Property Fund on Wednesday declared a second interim distribution resuts with A-linked unit distribution growth of 5% to 66.51 cents, and B-linked unit showed an increase of 16.2% to 9.19 cents for the six months ended December.

The JSE-listed premier hotel and leisure property 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.

The fund said it had made further progress with its strategy of improving the quality of its property portfolio. This includes pursuing opportunities to acquire strategic properties such as the recent announcement to acquire the Radisson Blu Gautrain Hotel in Sandton and the acquisition in 2011 of the Westin Cape Town, with a combined value exceeding R1 billion

Commenting on the performance and industry fundamentals, CEO Gerald Nelson, said: “We are pleased that Hospitality achieved positive year-on-year growth in distributions, benefiting from the improving hospitality business environment, and after weathering extremely tough industry-wide operating conditions between 2009 and 2011.

The fund’s turnaround from previous distribution declines was due to the continued recovery of the hospitality sector, an improved portfolio, and the fund having overcome its "critical" debt-refinancing issues, CEO Gerald Nelson said.

“We continue to deliver on our strategic milestones to enhance the overall quality of our property portfolio. Having created a solid base with critical mass, we are following a two-pronged approach by acquiring large hotel properties in major metropolitan areas with diverse source markets and strong brands while disposing of non-core properties. The high quality of our properties provides a solid platform to benefit from as trading improves in the recovering market,” said Mr Nelson.

Mr Nelson, co-founder of the Fund who has held the position of Chief Executive Officer (“CEO”) since its listing in 2006, announced that he will be retiring as CEO from the Fund at the end of June 2013 and will remain on the board as a non-executive director. He will be succeeded by Mr Andrew Rogers, the deputy CEO of the Fund, assisted by Mr Ridwaan Asmal in his continuing role as Financial Director.

The Fund’s portfolio of interests in 26 hotel and resort properties in South Africa had a book value of R3.9 billion as at 31 December 2012, translating into a net asset value per linked unit of R10.16 excluding deferred taxation.