Kiriakos Anastasiadis, founder and Chief Executive Officer of Acsion
Acsion Limited, a specialist commercial, retail and residential property developer and owner, today announced its interim results for the six months to 31 August 2015.
Acsion listed on the Johannesburg Stock Exchange in December 2014. The Company has a developed investment property portfolio of R3.75 billion which delivered an operating profit yield of approximately 7.6%. Acsion focuses on delivering superior net asset value (NAV) growth which was up 2,3% at 10.42 cents per share for the six months.
Kiriakos Anastasiadis, founder and Chief Executive Officer of Acsion said: “Our development pipeline is progressing well and we have completed two projects including the third phase extension to Mall@Carnival, our flagship asset which is becoming entrenched as a leading regional mall.
“I am satisfied with the performance of the portfolio overall, particularly considering the tough trading environment.”
The in-house developed existing portfolio consists of mostly defensive retail assets with a total gross lettable area (GLA) of 188 716m2. This underpins the Group’s growth. Completed tenant relocations at Mall@Carnival and Mall@Reds resulted in a reduction of the weighted average vacancy level from 5,05% to 3.39% for the portfolio.
The portfolio’s weighted average lease expiry by gross lettable area (GLA) increased to 4.87 years following the completion of the Phase III extension of Mall@Carnival which opened for trade on 24 September 2015. Construction of the Phase IV expansion consisting of 2 900 m2 is complete and beneficial occupation has been approved with trading expected to start in December 2015. Driven by tenant demand, these expansions have introduced new tenants to the mall and enlarged the trading space of select existing national tenants, entrenching Mall@Carnival as a leading regional retail destination in its catchment area.
Revenue for the period totalled R215,4 million and net profit after tax was R96 million. Continued focus on controlling costs helped to counter the impact of challenging economic conditions and inflationary pressures faced by tenants.
Post period end, Acsion installed its first solar power solution at Mall@Emba at a cost of R16 million. The project is expected to produce about 1MW of electricity which will greatly reduce the mall’s reliance on the national grid. Depending on the success of the project, Acsion plans to install solar power at some existing larger developments and incorporate it in the planning of suitable new developments.
The Company has significant headroom to increase debt funding as its debt (amounting to R220 million at period end) equals a low loan-to-value ratio of just 5.74%. Given the low weighted average cost of 7.61%, all of the debt is at floating interest rates with a remaining average term of 7.03 years.
“Our stable income stream and high level of cash generation together with exceptionally low gearing, provides scope for internally funded growth.
“Continued investment in the existing portfolio and delivery of the development pipeline whilst reducing costs without compromising on quality through our ‘value engineering’ approach, will see us deliver superior growth for investors in the future,” added Anastasiadis.
Acsion has an established in-house property and asset management team and uniquely offers investors access to 100% of development profits. The current development pipeline which is expected to be completed by April 2018, comprises six secured development opportunities which will differentiate the portfolio into mixed-use and specialist residential assets.
Acsion has completed construction of two of its secured pipeline developments namely, Mall@Carnival Phase III and Hyde Park Terrace, whilst construction has commenced on another four developments namely, Acsiopolis, Mall@55, Trade55 and Mall@Moutsiya. Acsion has also started on Mall@Mfula, a new development that was not previously included as part of the reported development pipeline. Interest has been secured for approximately 50 units at Mamahlodi Gardens (previously Residential@Moutsiya) in Limpopo with construction set to start in the near future.
Acsion’s largest development Acsiopolis, a twenty story mixed-use development in Benmore has been transferred and is scheduled for completion in April 2018. Situated in the heart of Sandton, the site is positioned on Benmore Drive and consists of an approximate one hectare parcel of land for which Acsion has obtained mixed use development rights for 70 000 m2. In line with Acsion’s vision of sectoral diversification, a majority of the rights have been earmarked for residential use. Approximately 36 000 m2 would be executive apartments, 26 000 m2 would be subject to short term rentals, 5000 m2 will be utilised for retail and 1000 m2 may be utilised as office space, bringing the total square meters to be developed to 67 000 m2. Added to this will be six levels of underground parking some of which will be on-grade parking to cater to the retail section for shopper convenience.
“I am particularly excited that we have begun construction of Acsiopolis, our largest development to date. Situated in the heart of Sandton, the 67 000m2 mixed-use development will comprise mostly executive accommodation and has been designed to fit in with the evolving transport infrastructure in Sandton by accommodating the integration of pedestrian accessibility and bus routes,” added Kiriakos.
Further development opportunities have been identified such as Offices@Lusaka, a co-development in Zambia with up to 20 000m2 of office space and Mall@Maputo for which Acsion has signed a memorandum of understanding 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. This development has been delayed somewhat due to turnover in government officials and the need to inform them of the proposed development. Mall@Frankfort, an 8 000m2 shopping centre in the Free State is undergoing rezoning and construction is anticipated to commence once this has been finalised. These developments signify Acsion’s intentions to geographically diversify its portfolio with the immediate focus being Africa and longer-term Europe.
“Opportunities in the rest of Africa and Europe are being evaluated to add to our pipeline of value enhancing developments that can deliver a first year development yield of between 15%-20%.
“We remain focused on the completion of the secured development pipeline to diversify risk and trust that our growth objectives can be achieved despite the challenging economic operating environment,” concluded Anastasiadis.