Hospitality gets go-ahead to buy SSH portfolio for R3.5bn
The resolution was backed by 100% of the shareholders at the AGM yesterday
SHAREHOLDERS of Hospitality Property Fund gave the board the thumbs-up to acquire a portfolio of properties from Southern Sun Hotel Properties (SSH), a wholly-owned subsidiary of Tsogo Sun, for R3.5 billion.
The resolution was backed by 100 percent of the shareholders who voted in the general meeting that took place in Johannesburg yesterday. About 94 percent of the shares were represented at the meeting. Despite the approval, Hospitality’s share price remained flat on the JSE. It didn’t move from Monday’s closing price of R14 a share.
Hospitality said it would also undertake a renounceable rights offer to shareholders in order to raise up to R1.8bn to fund the cash portion of the purchase consideration of the acquisition. The rights offer will open on July 24 and close on August 4. Tsogo Sun said the portfolio to be acquired by Hospitality consisted of 29 hotel properties.
“The board of directors has resolved to undertake a rights offer to raise R1bn to fund the cash portion of the purchase consideration relating to the acquisition. Following the announcement the board has revised the rights offer quantum in order to mitigate the risk of cash drag on shareholders’ funds through efficiently aligning the receipt of capital raise proceeds with the anticipated timing of deployment thereof,” the group said.
The acquisition is not the first for Hospitality this year. In April the group said it has entered into a purchase agreement with Savana Property to acquire various sections and exclusive use areas of the Sandton Eye sectional title scheme.
It also entered into an agreement with Sandton Isle Investments to acquire an existing real right of extension in the scheme (real right acquisition) in which it said it would pay R301.55 million for both acquisitions.
Both purchases were classified as a category 2 transaction in terms of the JSE listings requirements and accordingly will not require the approval of Hospitality shareholders.
The Sandton Eye acquisition included Hospitality’s Radisson Blu Gautrain Hotel, an up-scale hotel comprising 220 rooms, eight conference facilities, the Central One Restaurant and bar, an outdoor swimming pool and sun deck and a fitness centre.
Tsogo Sun has also been active lately. In May the group said it was going to spend an additional R1.3bn to expand the Suncoast Casino and Entertainment World in KwaZuluNatal. The construction commenced in 2016, but was later interrupted and stopped due to unexpected challenges. However, construction re-commenced in mid-June, with an anticipated eighteen months to completion.