Accelerate assets lose R1bn in value after lockdown hammers malls

Accelerate Property Fund, the owner of SA’s largest shopping centre, Fourways Mall, says it wrote down its properties in the six months to September as the Covid-19 lockdown shut down its premium assets for months.

Its assets were devalued by 10% to R12.7bn.

The fund focuses on the Fourways node in Gauteng and the Foreshore in Cape Town. The group also said it will not pay any dividend in 2020.

“Pre-coronavirus we spent considerable effort in refinement of our strategy to focus on nodal strength and tenant-centricity across our portfolio. This focus stood us in good stead during the worst of the pandemic as we maintained a tenant retention ratio of 84%. We managed reversions and vacancies very well in the circumstances,” COO Andrew Costa said.

Accelerate negotiated rental relief packages worth R100m to help tenants stay open after the hard lockdown imposed to curb the spread of Covid-19.

“The quid pro quo of these negotiations is locking in longer lease terms and allowing us to rebalance the tenant mix,” Costa said. He said vacancies were well maintained, remaining stable at 11.5% despite the effect of the pandemic.

The offshore portfolio continued to act as a hedge for the group’s local exposure, with zero vacancies and an average lease term extended to 12 years. Accelerate owns a diversified portfolio in Austria and Slovakia.

Accelerate CEO Michael Georgiou said the fund’s flagship Fourways Mall helped it through a very difficult period.

“The defensiveness of Fourways as a node and Fourways Mall as a super-regional with a diverse offering is underscored by the 7,228m² of new leases concluded during the pandemic. Vacancies at the mall remain low, at less than 1% excluding the head lease,” he said.

Rental collections improved to 80% in September, up from 71% in August and 65% in July, as retailers showed improved turnovers and increased mall foot counts were reported.

Group revenue decreased from R555m in the prior comparative six months to R416m, and operating profit was reduced to R232m from R339m, mainly as a result of the R100m rental assistance granted to tenants and provisions for doubtful debts of R33m.

“Liquidity is key during this time, not only to ensure we meet all our obligations as they become due, but also to ensure we can provide maximum assistance to our tenants. Uncertainty around any possible second-wave lockdowns makes it virtually impossible to measure the short-, medium- and long-term effects the pandemic will have on individuals, businesses, society and the economy as a whole,” said Georgiou.

Accelerate’s share price closed 1.32% down to 75c, giving the company a market capitalisation of R749.2m.