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Dawn to sell hotels

Currently Dawn derives most of its income from the 11 hotel properties leased to pan-African hospitality group, African Sun Limited (ASL).

Mike Manyika, the Dawn chief executive said the move would also result in the property company “letting go of the small things we picked up as part of a survival strategy”.

“As a property company it’s in the normal course of business to acquire and dispose of property. There is nothing sinister about that,” he said.
“For us to make a difference, we need to look at the portfolio, need to sweat the existing portfolio and that entails some properties will be let go, some earmarked for disposal and offer other operators.”

The agribusiness unit and CB Richard Ellis (CBRE) had already been approved for disposal by the board.

The agribusiness unit was added to the group in 2009 to unlock value out of its idle land by partnering a seasoned farmer.

The results have not been pleasant as US$1,1 million crops were written-off this year.

The repositioning of Dawn was approved by the board and management meeting early this year, which said the property company should concentrate on its core business of property investment and development.

The meeting said related diversification of Dawn would be considered on a case by case basis as long as it supported core business.

The meeting also urged the company to reduce single tenant exposure.

In the outlook, Dawn was urged to focus more on property development, particularly housing.

Town planners have been engaged on the Marlborough residential and retail development.

At least 2 000 housing units would be built.

Analysts say Dawn’s decision to sell some of the hotel properties is motivated by the need to reduce its exposure to the tourism industry.

The tourism industry is sensitive to any political pronouncements and this means that Dawn’s revenue would be affected.

Under the current arrangement, ASL pays Dawn 10% of its gross monthly income.

Formerly, a wholly owned subsidiary of African Sun Limited, Dawn was incorporated as a variable rate loan stock company by converting its ordinary shares into linked units.

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