January 8 2024
JSE-listed landlord, Accelerate Property Fund has largely disappointed in recent years with an ill-fated European investment strategy and its flagship retail mall, Fourways Shopping Centre (which it majority owns) having cost millions to upgrade. Critics have explained that the mall’s redevelopment went heavily overbudget. The largest shopping centre in Africa has had to compete with likes of Mall of Africa which is the largest mall built in a single phase.
It may be time that Accelerate is taken over and then is delisted from the JSE. The new owners can then maximise the performance of the fund’s best assets.
Critics have felt that Fourways was delayed too many times and that Accelerate’s executive was overly rewarded considering its results have been disappointing in recent years. Fourways Mall might come right under the management of Flanagan & Gerard who in 2023, were appointed to turn the asset around. Accelerate wants to spend R200m on Fourways Mall, to improve the flagship asset in the north of Johannesburg.
Accelerate’s other assets in Fourways include BMW Fourways, Cedar Square, The Buzz Shopping Centre and Waterford.
The fund claims that Fourways Shopping Mall is worth R8bn with its gross lettable area of 178,202m2.
Signage in and around Fourways Mall will be upgraded, as well as improving internal and external aesthetics and interior changes to its tenant mix and flow will be completed.
To this end, Accelerate has appointed retail experts Flanagan and Gerard to manage Fourways Mall.
Accelerate’s assets in Austria and Slovakia have also disappointed and its management has kept mum about what held those retail assets back and prompted the fund to sell them in 2021.
Accelerate listed at R4.99 in December 2013 with a market capitalisation of R1.2bn, and is now trading at R0.66 with a market capitalisation of R885m. Today the group has new management which replaced the likes of former CEO, Michael Georgiou. It is led by joint-CEOs Dawid Wandrag and Abri Schneider. The two have to do their best to lure investors back to the fund. Accelerate claims to have a net asset value per share of 406 cents (R40.60) which suggests there is strong underlying value in its shares. This may attract suitors to buyout the real estate investment trust (Reit).
Accelerate has traditionally invested with a focus on multi-use real estate nodes. These include Fourways, George, Charles Crescent which is across the road from Kramerville, Gauteng and the Western Cape Foreshore.
Accelerate announced in mid-December 2023, that it had approved R1.1bn worth of asset disposals and a potential R300m rights issue to reduce its debt levels.
The group reported that for the interim six moth period to end-September 2023, its loan-to-value (LTV), increased from 42.1% in September 2022 to 47.7%. This was a significant increase in its LTV which can be used to measure the health of a real estate investment trust (Reit) like Accelerate. It measures a group’s debt relative to its asset base. Fund managers and other investors tend to prefer for LTVs to be below 40% before the property funds begin to exhibit financial distress.
Total debt fell from R4.5bn in September 2022 to R4.4bn, with average terms dropping from 1.7 years to 1.1, Accelerate reported. Hedged debt rose from 70% to 79.1%. Accelerate had some R101.4m in undrawn facilities, which it said would increase significantly through its disposals.
Is it time for Accelerate to be taken out or can its new management turn it around – even as a delisted entity perhaps?
alistair@propertyflash.co.za
