Acsion Limited, a specialist commercial, retail and residential property developer and owner, today announced its annual results for the three months to 28 February 2015, following its listing on the Johannesburg Stock Exchange (JSE Limited) in December last year.
The Company, which is differentiated from traditional Real Estate Investment Trusts (REITs) focusses on delivering superior net asset value (NAV) growth mainly by enhancing existing properties and completing value accretive developments. For the three month period, Acsion achieved normalised net asset value (NAV) growth of 6% (annualised 24%) representing R11.56 per share.
Kiriakos Anastasiadis, founder and Chief Executive Officer of Acsion said: “I am pleased with the value added to the portfolio in the short period since listing. Our existing portfolio has performed well supported by good management of costs and the development pipeline is progressing as planned.
“Mortgage bonds acquired through the forming of the group reduced another R32m after expansion costs of R25m, which underscores the highly cash generative nature of the business.”
The in-house developed existing portfolio consisting of mostly defensive retail assets with a total gross lettable area (GLA) of 188 716m2 was independently valued at R3.246 billion at listing, and underpins the Group’s growth. The core portfolio reported a weighted average vacancy level of 5.05%, of which 1.86% was strategic vacancies for the expansions and tenant relocations at Mall@Carnival and Mall@Reds respectively.
Revenue for the period totalled R107.4 million and net profit after tax was R40.8 million despite challenging economic conditions and inflationary pressure on tenants. The direct property expenses to rental income ratio for the period was 11,08%.
Our unique “value engineering” approach allows us to unlock a first year development yield of between 15%-20% which is our key principal requirement to invest in a specific development. Our development pipeline at an estimated cost of R1.981 billion, will enhance the portfolio and diversify risk both by sector and geography.“ added Anastasiadis.
Acsion has an established in-house property and asset management team and uniquely offers investors access to 100% of development profits.
The development pipeline which is expected to be completed over a three year period since listing, comprises eight secured development opportunities which will differentiate the portfolio into mixed-use and specialist residential assets. Projects developed for ownership include phases III and IV of Mall@Carnival (on the back of tenant demand), phase I of Mall@Moutsiya in Limpopo, phase I of Mall@55 and Trade 55 in Centurion, Acsiopolis in Sandton, and Mall@Mfula in Piet Retief. Two projects developed for sale include Residential@Moutsiya in Limpopo and Hyde Park Terrace in Sandton.
Further development opportunities have been identified such as Mall@Frankfort, an 8 000m2 shopping centre in the Free State and a co-development in Zambia with up to 20 000m2 of office space. A memorandum of understanding has been signed with the Mozambican Ministry of Sport to develop a 50 000m2 shopping centre on an 8.9 hectare piece of land in northern Maputo. Acsion’s effective holding would be 85% with 15% held by local partners. These developments signify Acsion’s intentions to geographically diversify its portfolio with the immediate focus being Africa and longer-term Europe.
The Company has significant headroom to increase debt funding as its debt (amounting to R198 million at period end) represented just 6.1% of the developed portfolio value. Given the low cost of 7.37%, all of the debt is at floating interest rates with a remaining average term of 7.32 years.
“We have a stable income stream and strong balance sheet with exceptionally low gearing at 6.1% of the developed portfolio value, providing scope for internally funded growth.
“New opportunities in high-growth markets in the rest of Africa and Europe are being assessed on a daily basis to ensure a constant future pipeline.
“Our focus is on the completion of the secured development pipeline over the next three years. We will continue to leverage our intricate knowledge of every aspect of the process, including the acquisition of land, construction, development and delivery of large scale projects to realise superior growth for our investors”, concluded Anastasiadis.