Acsion Limited, a specialist commercial, retail and residential property developer and owner, today announced robust results for the financial year ending 29 February 2016, delivering against its pre-listing forecasts.
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 year under review, Acsion achieved net asset value (NAV) growth excluding deferred tax, of 17.7% on the prior year period, representing R13.61 per share. NAV, excluding deferred tax increased by 27.2% for the 15 months since listing.
Kiriakos Anastasiadis, founder and Chief Executive Officer of Acsion said: “I’m satisfied with our overall performance, especially as pressure on consumers continued to increase during the year”.
“Our existing portfolio proved to be resilient and we delivered against our pipeline targets by starting development on four exciting, large scale projects as promised at the time of listing”.
“Phase III and IV of Mall@Carnival, our flagship asset, was completed in this year and commenced trading. These developments further entrenched the mall as a leading regional destination in the catchment areas south-east of Johannesburg.”
Acsion listed on the JSE in December 2014, one of four pure development plays in the sector. Properties at fair value increased to R4 617 million from R3 755 million due to fair value increases of existing assets, as well as the inclusion of investment property under development.
Net profit after tax attributable to ordinary shareholders of R685.9 million was declared, equating to basic and diluted weighted earnings per share of 173.70 cents and weighted headline earnings per share of 45.88 cents for the reporting year.
The Company is largely ungeared, with a loan-to-value ratio of 4.13% (2015:4.83%). Expansions, upgrades and current developments are funded from cash generated by operations. Management does expect, however, that gearing will increase significantly in the next financial year as the Group delivers on its growth targets.
The Group’s liquidity, adjusted for mortgage bonds prepaid by R162 million (2015: R147 million) is 2.3 times current liabilities. Mortgage bonds increased from R198 million in the prior financial year to R206 million as at February 2016.
The developed portfolio’s weighted average lease expiry by gross lettable area (GLA) remained stable at 4.11 years (2015:4.50 years) following the completion of the Phase III extension of Mall@Carnival which opened for trade on 24 September 2015. Vacancies are similarly low at 4.43% (2015:5.05%) of GLA on a weighted basis.
“Our stable income stream and high level of cash generation, coupled with our low gearing provides us with significant headroom for growth and we are continuously evaluating appropriate opportunities”.
“This is not only relevant to our development pipeline – we have exciting, value accretive solar projects underway at Mall@Reds and Mall@Carnival,” added Anastasiadis.
Acsion successfully commissioned its first solar power solution at Mall@Emba at a cost of R16 million during the reporting period. The project produces approximately 1MW of electricity which will greatly reduce the mall’s reliance on the national grid. As a result of the success of this initiative, Acsion has commissioned similar installations at Mall@Reds and Mall@Carnival for a 2MW and 4MW solar plant respectively.
Construction of two of Acsion’s secured pipeline developments namely, Mall@Carnival Phase III and IV and Hyde Park Terrace were completed during the year under review, whilst construction commenced on another four developments forming part of its pre-listing pipeline, namely Acsiopolis, Mall@55, Trade55 and Mall@Moutsiya. In addition, during the review period Acsion commenced development at Mall@Mfula on the back of sufficient national retailer commitments. Mall@Mfula is a new development consisting of 18 700 m2 retail space and will provide a complete formal retail offering to Piet Retief. National tenancy of around 70% is expected.
The combined GLA of these residential and mixed-use developments totals approximately 126 200 m2 and is currently carried at R830 million which indicates that there is still significant uplift that can be extracted from these developments compared to the existing portfolio.
Construction at Acsion’s largest development, Acsiopolis, a twenty story mixed-use development in Benmore commenced during the review period and is scheduled for completion in beginning 2019. 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 35 000 m2 would be executive apartments, 26 000 m2 would be for short term rentals, 5 000 m2 will be utilised for retail purposes and 1 000 m2 may be utilised as office space, bringing the total square metres 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.
Other pipeline 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 anticipates a holding of 85% with 15% held by local partners.
“Going forward, we will continue to focus on the completion of the developments in hand, as well as value accretive projects in our existing portfolio”.
“Our value engineering approach will continue to differentiate Acsion as we deliver on these large scale developments, realising superior growth for our investors,” Anastasiadis concluded.