Hospitality Property Fund - B (JSE:HPB)
Hospitality Property Fund Limited (JSE:HPB) is a specialised REIT investing in the hospitality industry, providing investors with exposure to rental income streams from the hospitality sector.
Hospitality’s portfolio is well diversified across geographic location and grading and comprises 54 properties with more than 9,000 rooms in South Africa. The leases for all properties have a fixed and variable component, with the exception of Southern Sun Pretoria, which is a fixed lease.
Hospitality’s geographic diversification has improved with the acquisition of properties from Tsogo Sun Hotels Limited (JSE:TGO). The diversity in property grading caters to the varying budgets and preferences for guests of all income groups. The diversity in brands offers a range of products to international and domestic markets.
Hospitality is focused on the asset management of its properties, with a long-term strategy of acquiring, disposing of and investing in a relevant portfolio to protect and grow shareholder returns. This strategy is delivered through responsible capital expenditure, an evaluation of acquisition opportunities as well as the optimal source of funding for these investments.
The asset management strategy also includes having dynamic and symbiotic relationships with the hotel management companies who focus on managing the hotel operations to maximise the income-generating capability of each hotel. The Fund’s asset management functions include monitoring of hotel performance through data analytics in order to maximise the earning potential of each hotel while seeking to mitigate risk.
As a REIT, Hospitality is required to distribute at least 75% of its profits. Distributions are exempt from dividend withholding tax and are taxed as income in the hands of shareholders, according to their individual tax status.