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Dear Pearl Valley Hotel 12J Investor,
TRANSFER OF HOTEL UNITS FROM THE DEVELOPER TO THE 12J FUND
The Futureneers Capital 12J qualifying company ("QC or PropCo") took transfer of the most recent batch of hotel room units during Dec 2021. This means that to date, the 12J fund indirectly now owns 22 hotel room units which equates to 31% of the total number of rooms.
Circa 1 year post-completion of phase II of the hotel we invite you to view the complete hotel development at the following links:
SENTIMENT ON THE RECOVERY OF THE HOSPITALITY INDUSTRY WITH SPECIFIC REFERENCE TO THE PEARL VALLEY HOTEL
The Hotel Operator (Mantis) reports the following:-
“Looking forward, we are much more optimistic than the same time last year. The addition of the additional 40 rooms (phase II) to the hotel, allowed us to accommodate larger groups and optimize high demand periods.
There has been a significant improvement in demand between October 2021 – February 2022, so much so that we were able to show a small profit for the financial year ending 28 February 2022.
The business on the books for the last 2 months of summer remains strong and keeps on improving on a day-to-day basis. Traditionally the Cape Winelands experiences low occupancies and rates during the winter months, and we are expecting the same for winter 2022.
The current demand is mainly driven by domestic leisure over weekends, but we have made great inroads into the corporate event and functions markets. The reliance on the domestic market has put pressure on our achieved average rate and we are expecting this trend to continue for the rest of 2022.
Demand from international tourists remains low, but we have seen an uptick in enquiries. Lead times from this market remains in the +-180 day range, and we are only expecting a partial recovery from October 2022 onwards, depending on how the situation in Ukraine unfolds.
Challenges such as flight availability and costs, uncertainty as to if or when there will be a 4th COVID-19 wave and the inconsistency between governments regarding PCR tests vs. vaccinations for returning citizens, are the main drivers towards the low demand.”
CURRENT & PROJECTED OCCUPANCY LEVELS
The Hotel Operator (Mantis) reports the following:-
“We finished the 2021/22 financial year with an average occupancy of 31% and an achieved average rate of R1,178 per room. Between October 2021 and February 2022, we achieved a 46% occupancy at an average rate of R1,325 per room.
Our forecasts for the next 2 years (reflected in the table below) were done in November 2021. Indications are that we are leaning more towards the high road scenario, than the middle road.
Again we need to be cognizant of the situation in Ukraine as well as what impact the fuel price will have on costs of flights, travel and inflation in general.”
The key takeouts here are the following:-
- It is clear that Mantis is forecasting on a conservative basis with regards to occupancy levels.
- Depending on the rate of recovery of the industry, there is a possibility that dividend yields could be impacted negatively during Y3 to Y5 of your investment compared to Y1 and Y2 (which are backed by the guaranteed returns negotiated with the developer).
HOTEL & GOLF BOOKING PROCEDURE
Investors wanting to make use of their annual allotted free room nights should contact the Pearl Valley Hotel directly at 021 876-8000 or email Gail Roux at email@example.com who will assist you.
While in residence at the hotel, investors and their guests qualify for special green fees as detailed in the table below. Golf bookings should also be made with Gail Roux and not directly with the pro shop to avoid confusion with regards to the special rates investors qualify for. Gail will coordinate with the pro shop.
We are pleased to announce that we declared our first dividends even after an extremely tough two years severely affected by COVID-19.
As a general rule, dividends are calculated applying the following simple calculation:
- Net Income received from hotel operations (incl. interest earned).
- Minus: Management Fees of 1.5% as per your contracts.
- Minus: Property Taxes on sectional title units.
- Minus: Taxation at 28% (this is paid by the company, not the investor).
Please also bear in mind that an additional 20% Dividends tax is deducted from your dividends and paid on your behalf to SARS should you have invested in your personal name, while company investors are exempt from this dividends tax. However, the net amount you will receive in your bank account is net of all taxes and fees.
Should you have funded your investment by means of a loan through Ekwiteit (Pty) Ltd, our accredited NCR loan provider, all dividends declared to investors still owing amounts to Ekwiteit are offset against the loan - this simply means the dividends are credited against your outstanding loan.
To this end, please be on the lookout for an individual follow-up email (via ZoHo Sign) during the next week or two where you will be requested to confirm your banking details to be used to pay your dividends.
To receive occasional WhatsApp updates regarding your investment, please add Deon Lewis (+27 82 552 9788) as a contact on your phone.
Deon Lewis and the Futureneers team
CEO: Futureneers Capital