The Fund’s property portfolio consists of interests in 26 hotel and resort properties in South Africa. The properties can be categorised into three lease segments, namely; fixed lease properties, fixed and variable (F&V) and variable lease properties.

Fixed lease agreements

The fixed leases apply to four properties and recorded gross rental income of R122,6 million, accounting for 44% of total rental income for the year. These properties are: Birchwood Hotel & OR Tambo Conference Centre, Champagne Sports Resort, Kopanong Hotel and Conference Centre and Premier Hotel King David. Rentals under fixed lease agreements are determined by commercial lease terms with inflation-linked escalations. The lease on the Birchwood Hotel & OR Tambo conference centre, which was due to expire in three years, was renegotiated on 1 July 2011 and extended for a ten-year period.

F&V lease properties

F&V lease agreements comprise some 50% fixed lease rental, with the balance being variable rental equivalent to between 90% to 98% of the hotel’s EBITDA (earnings before interest, tax, depreciation and amortisation) after paying the fixed portion of the lease. The F&V lease properties are: Westin Cape Town, Arabella Hotel & Spa, Crowne Plaza Johannesburg – The Rosebank, Holiday Inn Sandton – Rivonia Road, Mount Grace Country House & Spa, Protea Hotel Victoria Junction, Protea Hotel The Winkler, Protea Hotel Hazyview, Protea Hotel Richards Bay, Protea Hotel Hluhluwe & Safaris, Protea Hotel Imperial, Inn on the Square, Protea Hotel The Richards, Protea Hotel Edward, Protea Hotel Marine and The Bayshore Inn.

The F&V lease category now includes the previous c-corp leases. The company’s sixteen F&V lease properties contributed 50% of total rental income for the period with gross rental income of R139,3 million.

Photograph: Holiday Inn Sandton

Variable lease properties

The variable lease category consists of interests in five courtyard hotels situated in Arcadia, Cape Town, Eastgate, Rosebank and Sandton as well as the Radisson Blu Waterfront in Cape Town.

Income derived from these properties comprises EBITDA from the hotel operations.

For the reporting period, these properties contributed 6% of total rental income with gross rental income of R15,1 million.