Research

Global credit ratings affirms Accelerate's Property senior unsecured rating of BBB+(ZA); outlook stable

On 10 March 2015 Global Credit Ratings affirmed its initial national scale senior unsecured ratings assigned to Accelerate Property Fund Limited of BBB+(ZA) and A2(ZA) in the long and short term respectively. The outlook was accorded as Stable.

This affirmation follows Accelerate’s announcement in October 2014 that it successfully entered the debt capital markets with the completion of its debut senior secured commercial paper issuance off a newly established R5 billion Domestic Medium Term Note Programme registered with the JSE.

Andrew Costa, Chief Operating Officer of Accelerate commented:

“Accelerate is reasonably geared and has a healthy interest coverage ratio in excess of 2.7 times.

Our investment grade senior unsecured rating together with our senior secured rating of AA-(ZA) provides significant comfort to our investor base and forms the cornerstone of our capital markets funding.

Access to capital markets provides us with a lower cost of funding and importantly, funding diversification.”

Eyal Shevel, Head of Corporate Ratings at Global Credit Ratings commented:

“Accelerate, which listed in December 2013, is a mid-sized REIT that has a property portfolio of sound quality and a longstanding history. Its portfolio is characterised by its exposure to the retail sector, and in particular to shopping malls located in the Fourways node of Gauteng. This exposure is complemented by office properties, but is expected to reduce slightly in the short term as a result of large acquisitions in 2H F15. Over the longer term, however, the Fourways area remains pivotal to Accelerate’s overall strategy, and it expects to buy into the 90,000m2 off-balance sheet extension of Fourways Mall in 2018.

Accelerate reports sound growth prospects, as a result of a strong pipeline of opportunities over the medium term.

An improvement in the current rating would be subject to the portfolio having stabilised and earnings growth achieved such that the net debt to EBITDA margin is reduced to within GCR’s benchmark for “A” band rated domestic property funds.”