The Don Group has sold its remaining five hotels for R120,5m as part of its plan to transform itself into a property management company.
Late last year, the company announced it wanted to leave the overcrowded hotel market to focus on residential letting. It has spent more than R30m converting some of its hotels into residential units.
The company also wants to pay off debt, some of which is owed to the Industrial Development Corporation (IDC).
Don Group chief executive Thabiso Tlelai said on Tuesday (20 November) that five properties were sold for a total of R120.5m to various companies. The properties included one hotel in Rosebank, Johannesburg, which was sold to Calaska for R36m.
Calaska also bought a property in Arcadia, Pretoria for R19m. A property in Isando, on the East Rand, was sold to Magnacorp for R24.5m.
Another property in Arcadia, Pretoria, was sold to Sentinel for R21m, while the hotel in Eastgate was sold to Mohamed Carim for R20m.
The group began converting its loss-making hotels into residential units last year.
In October last year, the Don Group informed shareholders it owed the IDC R70m. The corporation said the group needed to pay back its loan earlier than originally agreed if it was to convert from hospitality to residential letting.
Before these five sales, four properties had been sold since the decision was taken last year to get out of owning hotels.
The Don Group said in a statement that because of the high levels of competition within the travel and leisure sector its profit margins had been negatively affected.
"(This was a result of ) the recent entry of numerous new hotels‚ as well as the expansion of existing hotels in South Africa."
It said this situation had become increasingly unsustainable for the company in the long term.
Source: Business Day via I-Net Bridge
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