TSOGO SUN ON THE HUNT FOR REAL ESTATE INVESTMENTS

JOHANNESBURG – Gaming, Leisure and Hospitality group Tsogo Sun is on the prowl for real estate investment trust (Reit) acquisitions to boost its portfolio and performance on the back of the unbundling of operations in June which boosted its performance in the six months to September.

Chief executive Marcel von Aulock said the group, which was cementing its inland footprint with the construction of a 123-room hotel in Fourways, Johannesburg, had trimmed expenses through a lease buy-out of the Southern Sun Pretoria.

Von Aulock said the focus was now on the property market. “Lots of Reits are under a lot of pressure, there are assets for sale and we think there are great opportunities out there to expand the portfolio,” Von Aulock said.

Tsogo Sun Hotels, which presented its first half-year results since unbundling from Tsogo Sun Gaming earlier this year improved its total income 2percent to R2.1billion.

It achieved this with a 3 percent growth in hotels rooms revenue and a 4percent growth in food and beverage revenue offset by a 2 percent reduction in other income. Earnings before interest, income tax, depreciation, amortisation, property rentals, long-term incentives and exceptional items (Ebitdar) of R559 million ended 3 percent down compared to the corresponding period last year.

The group did not declare a dividend as it said it planned to utilise the cash generated in the first 15 months of the unbundling towards the settlement of the offshore division’s dollar denominated interest-bearing debt.

Tsogo Sun Gaming improved its income 5 percent during the period to R6bn, while operating profit lifted 3 percent to R1.5bn and Ebitdar increased 4 percent to R2bn. The division declared an interim dividend per share of 26 cents.

Operating expenses, including gaming levies and VAT and employee costs, but excluding exceptional items and long-term incentives, rose 5percent on the prior period, which was controlled mainly due to the focus on reducing casino and head office overheads.

Von Aulock said the results were an overhang from both the second half of last year and the first half of the current one as the industry did most of its business from leisure time in both halves.

Tsogo Sun Hotels shares closed 1.69 percent lower at R3.50 on the JSE yesterday, while Tsogo Sun Gaming shares gained 0.81 percent to close at R12.38.

Source: Business Report: