Don Group surviving on rentals

In 2011‚ the group converted all of its properties from hotels to rental apartments as a result of the challenges facing the tourism sector "and in view of growing opportunities identified in the broader property sector".

During the six months to December‚ rental revenue was R8.1m compared with R2.8m in the prior period. "The marked increase in rental revenue is as a result of improved vacancy percentages as the conversion to rental leasing was completed in the 2012 year‚" the group said.

Expenses reduced "substantially" since the conversion of the hotels to rental apartments. However‚ due to continuing cash flow challenges the group was still burdened with legacy costs that stemmed from the hotel operations‚ it said.

A loss of R1.8m reflected the growth in rental revenue and "marked decrease in operating expenses in line with the change from hotel operations to the rental operations".

The proceeds of various hotel disposals would be used to substantially settle liabilities.

The disposals would result in the group being classified as a "cash shell" in terms of the listings requirements of the JSE.

Thereafter‚ should the group fail to enter into an agreement relating to the acquisition of viable assets that satisfied the conditions for listing in terms of the JSE listings requirements within six months‚ its listing will be suspended.