Asset injection from Tsogo helps HPF grow its distributable earnings

Hospitality Property Fund (HPF), the only hotel-focused real estate investment trust on the JSE, grew its distributable earnings 46% in the six months to December, following an asset injection from Tsogo Sun.

The group’s distributable earnings grew to R197m from R135m. During the reporting period, a transaction was completed wherein gaming and leisure group Tsogo Sun injected 10 hotel properties into HPF in exchange for more than 50% of HPF’s ordinary shares.

The fund’s portfolio consisted of interests in 24 hotel and resort properties in SA, post the injection. HPF also restructured its A and B shares into a single share structure.

Distributable earnings increased 8% on a like-for-like basis adjusted for the effect of the transaction and the disposal of certain properties.

CEO Keith Randall said Hospitality’s turnover was dependent on its underlying hotel trading businesses, which were cyclical in nature.

The six months to December 2016 included a robust summer period for its Western Capebased hotels.

“A 4% increase in foreign arrivals during the 2016-17 holiday period supported the South African hospitality sector, however, domestic demand remains subdued as a result of the uncertain macroeconomic climate and weak business sentiment,” said Randall.