Accelerate Property Fund has published its interim results for the six months ended September 2024, having disposed of five assets (9 and 10 Charles Crescent, Brooklyn Place, Eden Meander Shopping Centre and 610 Voortrekker Road), reducing its debt of R564 million, during the reporting period.
Post-period, 89 and 99 – 101 Hertzog Boulevards were disposed of, reducing debt by a further R69.8 million with the disposals of Pri-Movie Park and 1 Charles Crescent awaiting Competition Commission approval. Transfer of Beacon Isle, Valleyview, and Cherry Lane is anticipated for late February 2025.
The REIT’s revenue decreased by R73.5 million during the reporting period due to the removal the the headlease following the conclusion of a settlement agreement with Michael Georgiou, as well as the impact of disposals of Leaping Frog, Ford Fourways, and Eden Meander. Its property expenses increased by R9 million between September 2023 and September 2024 mainly due to increased utility costs and fees paid to the new asset and property manager of Fourways Mall, Flanagan and Gerard and Moolman Group. Other operating expenses decreased by R6.3 million due to a reduction in staff costs.
Accelerate’s finance costs reduced significantly by R33.9 million from settling debt through the disposal of its assets and raising capital through a fully underwritten rights issue of R200 million with its finance income reducing by R42.1 million.
Following the disposal of 9 and 10 Charles Crescent, Brooklyn Place, Eden Meander, and 610 Voortrekker Road in Brakpan, its investment properties (non-current assets held for sale) reduced by R564 million.
Portside, Buzz and Waterford Shopping Centres, Thomas Patullo and Oceana were transferred from investment properties to non-current assets held for sale with the values reducing to fair value less cost to sell, based on a willing buyer, willing seller principle, and current negotiations that are underway. The fair value adjustment amounted to R152.8 million.
The Group’s trade debtors decreased by R34.2 million, supported by improvements in the recovery of outstanding debtors and write-offs mainly from Fourways Mall.
Interest-bearing borrowings decreased with its expiring debt at yearend (31st March 2024) renewed mainly for a year to 31st March 2025 with facilities that expired in August and September 2024 renewed too. Most of the REIT’s debt matures at the end of March 2025 with some notes expiring at the end of February 2025. It says discussions to renew these facilities are underway.
During July 2024, Accelerate concluded a settlement agreement, effective 1st April 2024, with Michael Georgiou in which balances due to the Fund would be set-off through the acquisition of bulk and parking bays in Fourways Mall, the cancellation of property management agreements with Accelerate Property Management Company Pty Ltd., and Fourways Precinct Pty Ltd., as well as the settlement of the rebuilt claim to Azrapart Pty Ltd. Subsequent to interim-end, the settlement agreement lapsed due to certain conditions precedent not being extended or met on time. The Fund says it is in the process of re-signing the settlement agreement after which a circular will be presented to shareholders.
In December 2023, the Group concluded a Heads of Agreement with Flanagan and Gerard and Moolman Group for asset and property management services to Accelerate and Azrapart as co-owners of Fourways Mall. Although the agreement lapsed, resulting from certain conditions precedent not being met, Flanagan and Gerard and Moolman Group continue to provide their services, on a month-to-month basis, while the agreement is being re-instated.
The Fund’s overall vacancies increased from 19.8% (excluding the headlease as at 30th September 2023) to 21.1% (March 2024) and subsequently to 21.7% during the period. It says that significant progress has been made at Fourways Mall to reduce vacancies from 19.2% (March 2024) to 17.9% (September 2024).
Vacancies of 5 228m2 were filled during the period with 9 105m2 becoming vacant. Its vacancies relating to disposals contributed to a 11 312m2 reduction however, total gross lettable area (GLA) also reduced from 361 364m2 to 316 498m2, increasing its overall vacancy percentage from 21.2% (March 2024) to 21.7% (September 2024).
Post the interim period, 6 170m2 (Accelerate’s 50% portion) of vacancies were filled at Fourways Mall and following the transfer of 89 Hertzog Boulevard, 99 – 101 Hertzog Boulevard, Beacon Isle, Valley View, and Cherry Lane, vacancies will reduce to 17.5%.
A negative rental reversion of 7% in aggregate was reported across its portfolio (excluding Fourways Mall) which was mainly driven by a 25% downward rental reversion at BMW Fourways which had a long-term lease of ten years that has now reverted to market for a further ten years.
Renewals at Fourways Mall of 32 939m2 were concluded, 24.2% of which were positive rental reversions, 3.2% flat reversions, and 72.6% at lower reversions compared to the maturing rent.
Capital expenditure (capex) of R178.9 million (2023: R99.9 million) has been authorised but not contracted for the period under review.
In October 2024, the Competition Commission approved the proposed acquisition of Accelerate Property Fund by a consortium of private equity funds, with conditions.
Accelerate’s loan-to-value (LTV) ratio currently sits at 46.7% (2023: 47.7%) with its Board resolving not to declare a dividend for the period.
