3 days ago
Accelerate Property Fund reports significant credit losses and strategic disposals
JSE-listed Accelerate Property Fund has Fourways Mall as the flagship of its portfolio. Vacancies in the mall decreased to 13.7% by the en of the year to March 31, 2025, from 19% a year before.
Image: Fourways Mall/Facebook
Accelerate Property Fund (APF), which has Fourways Mall as the flagship in its portfolio of retail, office and industrial properties, has massively increased its credit losses to R1.05 billion due to the impairment of a related party agreement of R970.7 million.
In the results for the year to March 31, rental income fell by 5.7% to R824.04m. Net property income was down by 8.3% to R494.74m. Including the expected credit loss, the taxed loss increased 103.2% to R1.27bn from a R624.74m taxed loss a year before.
The big impairment related to a settlement agreement entered into in November last year, between APF and co-developer of the mall, Azrapart, that had lapsed due to suspensive conditions not being fulfilled in the requisite timeframe.
Last month, Azrapart was placed into business rescue by the High Court in Bloemfontein, following an application by FirstRand's RMB and Investec, but Azrapart is appealing the ruling.
Other parties to the agreement are the trustees of the Michael Family Trust; and Accelerate's former CEO Michael Georgiou, who also controls Azrapart.
Although a new agreement was drawn up, it had still not been signed at the release of the results. As a result, the amount was impaired. 'As at the date of this report, Mr Georgiou (on behalf of the related parties) has not signed the new settlement agreement,' Accelerate's directors said.
They said that despite its challenges and the geopolitical and economic headwinds, the group focused on strategic objectives - optimising the balance sheet through disposals to reduce debt and the concomitant reduction of SA REIT loan-to-value.
During the year, eight assets were disposed of with a combined lettable area of 63 284 square metres, for R694m.
After the financial year-end, Erf 7 Roggebaai and 1 Charles Crescent were transferred with a combined area of 15 547 square metres. The proceeds of R62.4m were used to settle debt.
Sale agreements for a further four properties were concluded to the value of R688.5m, with a lettable area of 41 719 square metres, and a combined vacancy of 28.8%. The group's average collection rate was 98.9%.
The directors said the formation of the Government of National Unity had improved investor confidence, and GDP growth was projected to accelerate to 1.5% in 2025 supported by stabilising electricity supply. Inflation had moderated.
Regarding the outstanding related party matter, the directors said preliminary legal advice suggested the company's claims against the related parties were unlikely to have prescribed. 'However, certain aspects of the legal position remain under consideration.'
Operating costs fell by 13.5%, largely due to decreased staff costs, but legal fees increased after the conclusion of sale agreements, related circulars, redrafting of related party agreements and the restructured finance agreements.
Disposals unlocked proceeds of R694m utilised to reduce interest-bearing borrowings.
During the year, R110.4m was spent on properties which includes investment properties and non-current assets held-for-sale. This was funded from available funds from facilities as well as specific facilities put in place for Fourways Mall.
Vacancies decreased to 19.4% as at March 31, 2025, from 21.1% as at the same time a year before. Vacancies in Fourways Mall decreased to 13.7% from 19% following an aggressive drive to attract new tenants.
The SA REIT LTV decreased to 48.3% from 50.3%. This was mainly a function of the disposals and LTV was expected to improve as the disposal programme progressed.
On July 25, 2025, the company successfully raised R100m through a fully underwritten rights offer.
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