Accelerate Property Fund has accepted an offer from Sasol Pension Fund to acquire Eden Meander Shopping Centre and an adjacent 7 094m2 vacant land parcel in George in the Western Cape.
The minimum purchase consideration will be approximately R521 million, calculated on a 7.50% net income capitalization rate applied to a twelve-month net operating income (NPI) forecast from the 1st of December 2023. The final purchase price will be determined following the due diligence process.
“In line with our asset recycling strategy, we believe that disposing of Eden Meander at this attractive yield to a credible counter party will unlock considerable value for shareholders, as it enables us to strengthen our balance sheet,” commented Abri Schneider, Joint CEO of Accelerate.
Proceeds from the disposal will be allocated towards settling debt and are expected to have a positive impact on the group’s financial ratios, including loan-to-value (LTV) and interest cover (ICR).
Since the financial year end, Accelerate has disposed of the Ford Fourways premises and Leaping Frog Shopping Centre, which reduced its LTV by 1.2% and improved the ICR by 0.1 times.
The disposal of Eden Meander will further reduce its LTV by 3.0% to 39.6% and result in a further meaningful improvement of the ICR.
During its financial year ended March 2023, Accelerate successfully transferred R146 million of assets and concluded sales agreements of additional disposals with an aggregate value of R292 million (held for sale at 31 March 2023).
“The decision to sell this asset was not taken lightly, however the price achieved coupled with the positive impact on Accelerate’s financial metrics all contributed to the Board’s decision,” Schneider concluded.
The effective date of the transaction is expected to be during November 2023, when the property transfers into the name of the purchaser.