Hospitality yesterday said it had also entered into an agreement with Sandton Isle Investments to acquire an existing real right of extension in the scheme (real right acquisition).
The group said it would pay R301.55 million for both acquisitions.
It said the scheme acquisition and real right acquisition is, on an aggregated basis, classified as a category 2 transaction in terms of the JSE listings requirements and accordingly will not require the approval of Hospitality shareholders.
The group said the Sandton Eye acquisition would include the Hospitality’s Radisson Blu Gautrain Hotel, an upscale hotel comprising 220 rooms, eight conference facilities, the Central One Restaurant and bar, an outdoor swimming pool and sun deck and a fitness centre.
“The aggregate purchase consideration of R301.55 million will be settled as follows: R271.40 million in cash on the transfer date, being the date of registration of the scheme and the real right acquisitions to HPF; and R30.16 million by way of the issue of Hospitality shares, at the 30-day volume-weighted average price on June 22, 2017,” the group said.
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Hospitality Property Fund is a Real Estate Investment Trust offering investors a unique vehicle in the hospitality sector through the ownership of select hotel and leisure properties.
The scheme acquisition, which comprises retail areas, 146 additional parking bays, roof areas, lift shafts, store room areas, office areas, conference and entertainment areas as well as advertising and signage rights, complements the existing hotel operations and also results in Hospitality’s participation quota in the scheme increasing from 58.13 percent to 81.54 percent.
The real right acquisition cedes to HPF the right to extend the scheme by an additional seven floors up until February 2031.
Hospitality said the two acquisitions in Sandton were subject to Competition Commission approval and Hospitality obtaining JSE approval for the listing of the consideration shares by no later than July 31.
“The board of directors of Hospitality is satisfied that the aggregate value attributed to the scheme acquisition and real right acquisition is in line with the purchase consideration paid.
“The directors of the company are not an independent valuer and are not registered as professional valuers in terms of the Property Valuers Professional Act 47 of 2000,” the group said.
Hospitality urged shareholders to exercise caution when dealing in the company’s securities until a further announcement on the proposed transaction is made.
Hospitality Property Fund shares dropped 1.65 percent on the JSE to close at R13.75.