11 Oct 2012
Hoteliers and savvy investors looking to add to their portfolios should look no further than the Don Group’s four hotel properties on sale by tender.
The Don Hotel Group has mandated Ryan Joffe Properties to take the remaining four hotels in their portfolio to tender.
The properties will be sold separately with offers being accepted up until midday on 31 October 2012, explains Ryan Joffe of Ryan Joffe Properties.
The hotels to be sold include The Don Eastgate/Bruma located on 220 Queen Street in Bruma Lake, Bruma in Johannesburg.
Joffe says the property underwent refurbishment in 2008 and comprises a three storey and a five storey apartment block housing 19 two bedroom apartments and 39 one bedroom apartments.
Bruma is located to the east of the Johannesburg CBD, with neighbouring suburbs including Kensington, Oospoort and Cyrildene and offers easy access to major arterial roads such as the R24, N12 and the N3.
It offers self-catering accommodation made up of 14 two bedroom and 72 one bedroom apartments.
Isando is close to the OR Tambo International Airport with easy access to and from the R24 and the R21.
The fourth property is located on 595 Pretorius Street, Arcadia in Pretoria – the Don Hotel Arcadia II that comprises a five storey residential block which offers 20 two bedroom and 28 one bedroom self-catering apartments.
Last year, the Don Group Limited announced that they will change their business model and move from operating hotels to operating property assets.
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In a SENS announcement this week, the company says given the challenges facing the tourism sector, it resolved in 2011 to change direction and exit the saturated hotel industry into the property management sector, particularly the residential leasing space, in view of growing opportunities identified in the broader property industry sector.
This entailed ceasing all hotel operations, resulting in staff retrenchments in its remaining six properties effective 31 October 2011 and making the properties available for residential leasing.
The board is of the opinion that given the challenges facing the tourism sector, the decision to change direction and exit the saturated hotel industry is in the best interests of shareholders, according to the announcement.
Speaking to Property24.com about commercial property, Joffe says the market will continue to grow and notes that they are seeing lots of interest from investors with cash looking to put money into property as they see property as a safe haven.
“Commercial property prices will grow because of demand for this asset class, however, operating costs such as municipal rates and taxes and electricity will need to be contained or be stable otherwise if they continue to increase, this will affect property net incomes going forward.”
Asked on the popularity of sale by tender, he says in light of the auction industry scandals, many sellers view this method of sale as safe and feel more comfortable with the method.
Having said this, the method does not work for every property seller, and for it to work successfully so that it results in a sale, the property has to generate interest, he explains.
“Perhaps its advantage for the seller is that a sale by tender has a deadline by which all interested buyers should decide on whether they will buy the property or not.
“The buyer(s) also have an opportunity or are willing to sit the market but know they have to act by deadline.”
Joffe adds that the market has lots of buyers – there is, however, a lack of good quality properties and they are seeing a lot of properties being sold by sale of tender as opposed to auction. –Denise Mhlanga
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