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Feb 21, 2006:
Property was the buzz on the JSE yesterday when the Hospitality Property Fund and Acc-Ross, a leisure development group, listed on the same day.
However, while Acc-Ross was listed three days late following a call for a revised profit forecast, the Hospitality Property Fund showed up with a significantly oversubscribed private placement. The fund is jointly promoted by the Grapnel Property Group and Horwath Tourism and Leisure Consulting.
Gerald Nelson, the managing director of the Grapnel Property Group, said Hospitality's aggregate yield of 10.55 percent was extremely favourable when compared with the listed property sector's average forward yield of about 7.2 percent.
Acc-Ross listed on the JSE's Alternative Exchange at R1 yesterday morning.
The company was due to list on Monday morning but at the last minute, the JSE requested a revised profit forecast.
Jaco Verster, the chief executive of Acc-Ross, said the request from the JSE came through at 11am last Friday and "practically, we were only able to provide a revised forecast by Sunday morning".
The profit forecast in the company's abridged prospectus assumed that a private placement of 326 million shares would be fully subscribed and projected revenue of R1.2 billion for the year to February 2007.
The revised profit forecast shows revenue of more than R1 billion for the year to February 2007, and the company's market capitalisation on listing yesterday was about R880 million instead of the original expectation of R1 billion.
Verster said preference shareholders had been offered the opportunity to convert to ordinary shareholders on listing, and vendor shareholders with "vested interest in specific developments" had the chance to change their cash interest into equity.
The private placement offer closed with a subscription of 36 839 034 shares. However, including vendor shareholders, the total take-up amounted to 112 million new ordinary shares.
Assets in Acc-Ross include multimillion-rand resort developments in the Free State, Pretoria, Plettenberg Bay, Muldersdrift, the Eastern Cape, Mozambique and an existing golf and country estate in Gauteng.
He said management did expect the share price to drop "after all the negative press of the last week but was confident that the financial underprints would restore confidence".
The shares dropped 50 percent to 50c in intraday trade before climbing back up to close at R1.10.
Verster said the company's massive advertising campaign had been factored into the listing costs and was not a reaction to the bad press.
"We are sending a strong message to the market that Acc-Ross is here to stay and this is part of our branding exercise."
The majority of fund managers had been precluded from investing in Acc-Ross during the prelisting stages but Verster would be making presentations to the corporate market in the next few months.
