A. Ten Year Comparison With Other Investments
We have compared our Parktonian Sectional Title Hotel investment with alternative property and hotel investments over the 10 year period 2007 to 2016 during which our Sectional Title scheme has been operational.
The methodology was:
- We took the average price paid for a Parktonian Sectional Title unit in 2006 / 2007, which was R442 000 per unit.
- We took the estimated value of a Parktonian Sectional Title unit 10 years later as R600 000. This was based on the highest prices achieved in actual sales, which were R600 000. This is a 36% increase in capital value over 10 years, or 3.6% p.a.
- To the annual capital value increase of 3.6% p.a. (see 2 above), we added the cumulative annual income distributed to Parktonian Sectional Title owners over the 10 years which totalled R468 220 per unit.
- We then charted the Parktonian units versus R442 000 invested 10 years ago in various alternative types of property and other investment in South Africa. This chart is as follows:
- We then also charted the Parktonian units versus R442 000 invested 10 years ago in certain other hotel investments in South Africa.This chart is as follows:
The other SA hotel investments were charted on the following basis:
- The dividend amounts were derived from the companies’ financial statements.
- The dividend return was obtained by dividing the dividend amounts by the share price at year end.
- The share prices were as published for each year end.
- Please note that the dividends paid were after company tax paid by City Lodge and Tsogo Sun, but before dividend tax, if any, in the hands of the investor.
The above analysis shows that an investment in a Parktonian Sectional Title Hotel unit has done well when compared to most other property and hotel investments.
In addition to the above returns it should be noted that during the 10 year period being reviewed, the Parktonian hotel built, out of its operating income, its new Skylevel facilities and also added additional restaurant and conferencing areas at ground level. These facilities add to the potential income earning and capital growth prospects for the next 10 years.
We believe that this explains why many of our existing investors feel that our units offer the best property investment available. They feel that these units offer good monthly income plus capital growth. Moreover, there is a hotel management company in place that takes care of all the administration, marketing and sales, repairs and maintenance, etc., leaving the investor with a hassle-free hotel suite investment.
B. Years 2017 – 2020
By 2017 it was clear that the South African economy was deteriorating substantially, and much has been published in the media as to the reasons for this.
The tourism and hospitality sector was not spared the overall economic malaise. In addition, the tourism sector also suffered from new visa requirements that further dented tourism.
Until a month or two ago, the Parktonian stretched itself to continue payments of distributions to Sectional Title unit owners.
Then, in early 2020, the Coronavirus hit and decimated the airline, travel and hospitality industries worldwide.
The South African hotel industry has been almost 100% closed during the Government’s enforced lock-down period, which started in late March 2020. The Parktonian has been closed down by Government decree during this lock-down period. Government statements show every sign that most hotels are likely to continue to be closed for several months.
To reduce its dependency on the decimated hospitality industry, the Parktonian has taken steps to start letting out a good proportion of its 300 hotel suites as Luxury One-Bedroom Executive Apartments. So, when the hotel reopens it will have the same public facilities as it had before, but with a smaller number of suites utilized as hotel accommodation.