Diversified real estate investment trust, Accelerate Property Fund, which has reached new agreements with its funders, will focus on the disposal of non-core assets to cut debt and reduce the loan to value ratio, as well as cost containment and revenue enhancement, despite economic challenges and market volatility, joint CEO Adri Schneider said in a statement on Friday.
The group’s results for the year to March showed current liabilities of R3.9 billion and R4.5bn respectively, exceeding current assets by R1.9bn and R2.5bn respectively.
The group said this was mainly due to the structural tenure of the group’s funding facilities, and the ability to meet obligations to lenders in the short term would be constrained.
However, engagements with lenders resulted in agreements to reduce debt exposure to an LTV of below 50% by raising R200 million through underwritten rights offer, which successfully concluded on June 11, 2024.
The agreements also included disposing of assets that were reducing the overall liquidity of the fund, so as to further reduce the LTV below 45%.
“The funders remain supportive of the business and this is confirmed through the continued renewal of short-term facilities, with the renewal of the facilities for a further 12 months,” the group said in the results.
The results for the year showed the group loss widened to R624,74m from R594.26m.
At year end, Accelerate held 27 properties with a total value of R8.7bn.
“High finance costs and low economic growth provided significant headwinds. Our focus, however, remained on cleaning up the balance sheet and improving portfolio fundamentals. Most of these benefits will only flow to the bottom line in future reporting periods,” said Schneider.
Accelerate appointed Flanagan & Gerard, together with the Moolman Group, as the asset and property managers of the Fourways Mall, with the positive impact of this change already gaining traction.
After the reporting date, RMB extended R1.1bn of Accelerate’s loan facilities to March 31, 2025, with a further R230m extended to May 31, 2025. Sanlam extended R302m to August 30, 2024.
Accelerate’s finance cost had increased by 42.2% on the prior financial year, due to a R37.5m interest accrual that related to the prior year, a current year accrual of R47.2m and R71.1m as a result of a claim to a related party.
During the year, Accelerate paid debt of R202m following the disposal of Ford Fourways and Leaping Frog Shopping Centre.
After the reporting date, the group transferred Eden Meander, Brooklyn Place and 9 and 10 Charles Crescent. The proceeds of R563m were used to settle debt.
Sale agreements for a further three properties were concluded to the value of R176m.
During the year under review, rental income, including recoveries, decreased by R6.8m to R873.6m from R880.4m, largely driven by a 17,3% average decrease in retail rental.
Overall portfolio vacancies increased from 18.3% in the prior financial year to 21.1% at year end. The SA REIT loan-to-value increased from 48.2% to 50.6% year-on-year, mainly as a result of the reduction in fair value of the portfolio. This was expected to improve as the disposal programme progressed.
BUSINESS REPORT