Sources and uses

Capital structure and debt service

The R520 million is structured as R290 million of senior development debt (55.8%) and R230 million of equity (44.2%), a realistic gearing for a secured hotel development, and consistent with the brief’s reference to “equity and development capital”. The senior facility is priced at approximately 12.75% (prime plus 225 basis points), with a two-year capital grace during construction and ramp, then amortisation over thirteen years. Debt-service cover strengthens as the hotel ramps.

The Phase-2 capital requirement

The R520 million funds the flagship. The Year 4–5 revenue in the forecast implies Phase-2 hotels (Cape Town, Durban, Kruger) that, on a typical development cost-to-revenue ratio, require an estimated ~R875 million of additional capital. This is not a flaw in the plan, it is the nature of a portfolio ambition, but it must be financed separately and transparently, through further equity, additional development debt, or asset-light management and branded-residence structures. Investors in this round are funding Phase 1 with a clear line of sight to the capital the fuller ambition will need.

Capital adequacy and recommended reserves

A fundable structure requires reserves sized to the development and ramp, over and above the R520 million construction budget. The table sets out the recommended provisions; they may be funded through additional equity, a larger senior facility, or ring-fenced within the raise, but they should not be assumed away.