Hospitality Property Fund’s (HPH’s) wholly owned subsidiary HPF Properties (Propco) has entered into a new sales agreement with Savana Property to acquire 100% of the Radisson Blu Gautrain hotel and conference centre, in Sandton, for about R443.39-million.
Propco had cancelled the initial sale agreement, announced in December, wherein it agreed to acquire a 78.2% share in the hotel and 53 parking bays for about R346.75-million.
HPH indicated that it expected the property to be earnings enhancing, based on its anticipated trading performance and cost of funding. The property was projected to yield growth of about 8.15% in year one, with growth in rentals for year two expected to be about 15%. This growth is underpinned by a limited rental guarantee from Savana for the first two years of trading following the registration of transfer.
The company further noted that the total purchase consideration would be funded by a R275-million vendor consideration placement, the issuance of R150-million secured notes and the private placement of R18.4-million unsecured notes.
HPH would issue 12.48-million A-linked units (HPA) and 12.48-million B-linked units (HPB) as a vendor consideration placement. The linked units would be issued at a discount of 3% to the thirty-day volume-weighted average price up to and including March 28, resulting in an issue price of R16.65 and R5.39 per HPA and HPB, respectively.
Further, subject to the necessary bank guarantees being issued, the conditions precedent to the revised acquisition had all been fulfilled and registration of the property was expected during May.