- August 3, 2021
- Posted by: pragma_admin
- Category: Uncategorized
Private equity fund Actis will be buying Nairobi’s Fairview Hotel, Town Lodge, and City Lodge Two Rivers from their South African owners at Sh 1billion.
This comes at a time when Covid-19 has ravaged the hospitality industry mainly through hotel closures and booking cancelations and only after seven years of operation when City Lodge Hotel Group puts up the three Kenyan hotels and Tanzania’s City Lodge Hotel in Dar es Salaam for sale in plans to exit East Africa.
According to Chairman Bulelani Ngcuka, last year saw an Sh3.64 billion (R486.6 million) loss; the first in over the seven years.
“It was our most challenging operating year in the group’s 35-year history, mainly due to the lockdown protocols implemented by South African, and similar restrictions in the rest of Africa,” said Ngcuka.
The company plans to sell the Tanzania hotel for Sh7.3 million stating that the East Africa units were making losses of up to Sh2 billion by the end of last year.
“The losses attributable to the Kenya Assets and the Tanzania Assets including impairments was ZAR371.1 million for the six months ended 31 December 2020,” the Company said.
“The shares in respect of the Kenya Disposal will be disposed of for an aggregate consideration of ZAR140.9 million which will be settled in cash by Ukarimu and the shares in respect of the Tanzania Disposal will be disposed of for an aggregate consideration of ZAR1 million which will be settled in cash by Faraja,” the firm said.
Giving the update at the Johannesburg Stock Exchange where the hotel is listed,the firm confirmed that Ukarimu Limited and Faraja Limited are real estate funds under Actis.
City Lodge Hotel has also said that occupancy levels have been below expectations at Two Rivers while bookings in the Tanzanian unit have been sluggish, leaving only Fairview with a robust performance.
Fairview Hotel has 127 rooms, while City Lodge Hotel at Two Rivers has 171 and Town Lodge Upper Hill 84. The firm has said the sale was prompted by the need to reduce debt levels and eliminate operating losses. However, the firm has remained vague in reference to sluggish business being the reason for selling the hotels which will now leave its operations in South Africa, Botswana, Namibia, and Mozambique.
“The board of directors of City Lodge has previously communicated its desire to dispose of the company’s entire East African hotel portfolio together in order to reduce debt levels within the City Lodge group, increase group liquidity and eliminate ongoing operating losses,” the firm said.