Reuters and Bloomberg
TSOGO Sun, Africa’s biggest hotels and gambling operator, was considering listing its R30 billion property portfolio separately, its chief executive said yesterday.
The company, which posted a slight drop in full-year profit, said it would decide before the end of this year whether to place the offices and shopping centres it owned around its casinos in a real estate investment trust and list it on the JSE.
“We still want to control it,” chief executive Marcel von Aulock said. The trust would eventually seek a public listing, giving Johannesburg-based Tsogo Sun another means of accessing capital, he said.
“If this works, we could have an entire third new division, which has a lot of opportunities going forward,” Von Aulock said. “It’s a vehicle through which we can raise money for expansion, without being dilutory at the top holding structure.”
Tsogo Sun has been expanding through acquisitions and renovating existing hotels and casinos as it seeks to offset the impact of sluggish growth in the continent’s second-biggest economy.
While the casino business remained volatile, hurt by weak consumer sentiment in South Africa, the hotel environment was improving “quite nicely”, Von Aulock said.
Tsogo Sun’s profit eased as cash-strapped consumers in its mainstay South African market cut back on gambling and the government put the squeeze on civil servants’ travel expenses.
Tsogo Sun said diluted headline earnings per share, the main profit measure that strips out certain one-off items, dipped 1 percent to 175c.
Consumers in South Africa are spending less due to high personal debt levels and rising fuel prices while a weak economy restricted business and government travel.
Tsogo Sun, which also operates hotels in countries such as Nigeria, Kenya and Mozambique, said revenue from outside South Africa was unchanged.
Tsogo Sun shares on the JSE rose 2.48 percent to R27.30 yesterday.