Trips beats twos

As Tsogo and Hospitality restructure, the question for a gaming industry investor is: just how lucky do I feel?

Which should you buy: Tsogo Sun, Hospitality Property Fund, or investment group and parent Hosken Consolidated Investments (HCI)? If it feels a bit like a game of rock, paper, scissors that’s because Tsogo and Hospitality will have a very different investment proposition once their split and restructuring is complete.

Last week, Tsogo and Hospitality announced the terms of a transfer of seven casino properties, which both parties valued at R23bn, from Tsogo to Hospitality as a prelude to the creation of three separately listed entities: a hotel management company, a gaming outfit and a property group with gaming and hotel assets.

After the transfer, Tsogo will end up with 87% of Hospitality, whose own portfolio will grow to R36bn of assets, with the ultimate plan of unbundling that stake to its shareholders.

And atop it all is Johnny Copelyn’s investment holding company, HCI.

Says Tsogo CEO Jacques Booysen: “I suppose you’ve got to take a view on HCI but if you wanted pure exposure to the gaming industry you’d go into Tsogo. If you like hotels, you’d go into hotels and if you want to stay in income, you would go into Hospitality.”

Booysen says some investors who want a stable, escalating income might avoid gaming companies, but: “Then you’d have the people who say, as a gaming company that’s now fairly capital light, there’s quite a bit of upside if the economy turns.”

The hotel entity — now under the management of former Tsogo CEO Marcel von Aulock, who rejoined the group after quitting unexpectedly in June last year — will likely be spun ➦