RSA Hospitality Fund in talks to buy $247m of Tsogo Sun hotel portfolio
South Africa’s Hospitality Property Fund has revealed it is bidding up to $247 million (Rand 3.3bn) for hotel assets from Tsogo Sun, one of the country’s biggest hospitality operators, listed on the JSE, with 14 casinos and 90 hotels across Africa and the Middle East.
Hospitality PF already has 10 former Tsogo hotels, which is exchanged for a controlling stake last year and this week confirmed to Reuters it is in “negotiations with Tsogo Sun and/or subsidiaries over potential acquisition of a circa R3.3bn portfolio of hotel assets”. The proposed transaction will be implemented on an “income-for-income basis and funded by hospitality through a debt and equity”.
For Tsogo Sun, it means Hospitality PF is at the centre of its strategy of growing a hospitality-focused Real Estate Investment Trust, and in return Hospitality gets access to Tsogo’s established hotel properties that broaden its earnings base.
Two years ago Tsogo Sun revealed it is considering creating an entertainment and hospitality focused Real Estate Investment Trust for its hotel, retail and office property portfolio.
Hospitality PF’s CEO, Vincent Joyner was replaced by Keith Randall at the end of 2016 following the 10 hotel deal, after Tsogo used 10 hotels, valued at around $138m (R1.8bn) to secure more than 50 per cent of Hospitality’s ordinary shares.
Hospitality PF is the sole hotel-focused real estate investment trust (Reit) listed in SA with current ownership of 25 hotels, and about $545m (Rand7.1bn) worth of assets.
Tsogo Sun is one of South Africa’s leading hotel groups established in 1969 now boasts 95 hotels (including The Southern Sun, Johannesburg, pictured above), with 14,500 rooms, throughout Africa, the Middle East and the Seychelles with respected brands such as the Southern Sun Hotels, Garden Court, Montecasino, Gold Reef City and Suncoast.
Tsogo Sun’s casino-developments includes 14 properties and features some of the largest and most popular entertainment destinations in South Africa. Tsogo Sun’s first casino opened in Nelspruit, Mpumalanga, in November 1997. In the Gauteng province, this group owns the Montecasino in Fourways as the flagship operation, complimented by Gold Reef City in Southern Johannesburg and Silverstar to the West in Krugersdorp.
These hotels include a variety of entertainment, ranging from theatres to theme parks, movies, restaurants, bars and hotels. Additional casinos are owned and operated in the Western Cape, Eastern Cape, Free State, Mpumalanga and KwaZulu-Natal provinces, including the landmark Suncoast Casino on the beachfront in Durban.
SunConnect represents Tsogo Sun’s conferencing, hospitality and events division, which provides tailor-made solutions at 250 venues across South Africa.