The JSE-listed real estate investment trust (REIT) Accelerate Property Fund has reported a loss of R625 million for the year ended 31 March 2024.
The group finally published its full-year results after several delays, which drew a suspension warning from the JSE this week.
The loss is mainly attributed to the revaluation of investment property to its fair values and increased expected credit loss allowances during the year resulting from long overdue debtors, it said.
Its position has deteriorated from the prior year, when it recorded a net loss of R594.3 million.
“The year has seen significant geopolitical and economic headwinds. The war in Ukraine has exerted upward pressure on energy and food prices worldwide, spurring global inflation and abruptly interrupting an already lacklustre post-Covid financial recovery.
“Global growth forecasts continue to revert downward, more so for emerging markets. Continued load shedding, high cost of energy, rising overall costs coupled with low economic growth, illiquid financial markets, and higher interest rates will continue to put the Fund under pressure,” it said.
The group said that it remains a going concern, able to generate sufficient cash flows to meet its obligations for the following 12 months.
While the Group and Company’s total assets of R9.7 billion and R10.3 billion exceed the total liabilities by R4.7 billion and R4.7 billion on 31 March 2024, respectively, its current liabilities shows the group is under severe pressure.
Current liabilities of R3.9 billion and R4.5 billion exceed its current assets (including non-current assets held-for-sale) by R1.9 billion and R2.5 billion for the Group and Company, respectively.
“This is mainly due to the structural tenure of the Group’s funding facilities and, as such, the ability of the Group and Company to meet its obligations to lenders in the short-term will be constrained,” it said.
The Group’s covenant loan-to-value (LTV) ratio was 49.7%, compared to 47.2% in the prior year. This ratio does not exceed the covenant set by the lenders of 50.0%, it said.
Looking ahead, Accelerate said it is committed to reducing its debt exposure by raising R200 million through a fully underwritten rights offer which successfully concluded on 11 June 2024. It will add another R100 million to this in the 2025 financial year.
It aims to bring its LTV below 45%.
It said it will also dispose of assets that reduce the fund’s overall liquidity while continuing to renew facilities in the 12-month period ending March 2025.
This includes the renewal of Fourways Mall—the biggest asset in its portfolio.
R400 million upgrade
According to the group, it is spending R400 million to upgrade Fourways Mall in a bid to improve its fundamentals, improve its cash flow and reduce vacancies.
The mall currently has a fair value of R7.9 billion.
Accelerate owns 50% of the undivided share in Fourways Mall from 29 November 2019 and accounts for it as a joint operation. The remaining 50% of Fourways Mall is owned by Azrapart Proprietary Limited, a
related party as it is indirectly owned by Accelerate director and shareholder, Michael Georgiou.
The mall has been struggling with low rentals and a poor financial performance, which continued in the latest financial year.
The fund recently appointed Flanagan and Gerard and the Moolman Group to execute a six-month strategy to achieve this.
“The impact of this positive change is already visible. Investec and RMB committed to provide Accelerate’s portion of R200 million of a total R400 million of capex that will be spent on the mall,” it said.
On top of the rehabilitation attempts at Fourways, the group has been disposing of assets to settle debt – with more disposals in line for FY2025.
After the reporting date, the group transferred Eden Meander, Brooklyn Place, 9 and 10 Charles Cresent
with a combined GLA of 40,935 square metres.
The proceeds from the disposal of these assets of R563 million (net of commission) were used to settle debt.
The group has been trying to sell Cherry Lane in Brooklyn but has repeatedly hit hurdles in the sale.
