Tsogo Sun set to transfer three hotels into subsidiary
JSE-listed gaming and leisure group Tsogo Sun is due to transfer more hotels into its subsidiary, Hospitality Property Fund, in a move that would boost its assets base.
Tsogo owns three Sandton-based hotels in a joint venture with the Liberty group and is looking to move these properties into Hospitality, the only hotel-focused real estate investment trust listed in SA.
Its other subsidiary, ResHub, will acquire the underlying management companies of the three hotels. More details about the terms of the merger will be disclosed soon, according to Hospitality.
The Competition Tribunal on Thursday accepted that these deals would go ahead without conditions.
In terms of the merger, Hospitality would acquire the underlying hotel properties in respect of Sandton Sun Hotel, Intercontinental Johannesburg Sandton Towers Hotel and the Garden Court Sandton City Hotel.
ResHub would take over the hotel businesses in respect of the three hotels.
Hospitality would also acquire Sandton Convention Centre and the gym, Virgin Active Alice Lane.
Tsogo Sun acquired a controlling interest in Hospitality earlier this year. The group transferred 10 hotel properties valued at close to R1.8bn into Hospitality and subsequently gained majority control of the company.
Hospitality previously had ownership of 25 hotels, and about R7.1bn worth of assets. Following the latest deal, it will have 28 hotels but a value has not yet been disclosed.
Commenting on the transaction, Brendon Hubbard of ClucasGray Investment Management said: "There has been a proposal to flip these hotels into Hospitality in return for shares, but this still needs to be negotiated."
Hospitality has seen its fortunes turn around in the last year. In its most recent financial results, the company reported having grown its profit before distribution by 16.8% to R272m for the year to June, and managed to dispose of seven noncore properties, for a total net consideration of R189.9m.
This was under the stewardship of Vincent Joyner, who was brought in to help the struggling company. He joined in September last year and will leave at the end of this year.
Hospitality had for a number of years after the 2010 World Cup hotel boom, struggled to make consistent income. Tsogo Sun appeared to have seen an opportunity to acquire Hospitality, boosting its asset base.