PROPERTY FUNDING

Accelerate rental collection hits 80%

ACCELERATE Property Fund’s rental collection in September was 80 percent and the fund did not expect a reduction in long-term rental streams at its large shopping centres despite the Covid-19-related uncertainties, chief operating officer Andrew Costa said yesterday.

The rentals from its properties, which include Fourways Mall and Cedar Square Shopping Centre, were currently charged at below market or related rentals, he said in a telephone interview at the release of results for the six months to September 30, yesterday. The portfolio value as at the end of September of R12.6 billion was the same as at the end of March.

Vacancies by the end of the interim period were slightly higher at 11.5 percent from 10.8 percent.

Going forward, the nodal strategy would continue to be expanded, future value on assets and bulk would be unlocked, and financial covenants would be maintained.

Costa said that properties in the nodes that the group had identified for its strategy, such as at Cape Town Foreshore, Fourways and in George, had recovered faster than other areas.

He added that open-air and convenience type centres were doing well post-lockdown, while the bigger malls were attracting the younger generation more than older people.

Chief executive Michael Georgiou said the defensiveness of Fourways as a node, and Fourways Mall as a super regional, was indicated by the 7 228m² of new leases concluded during the pandemic. And vacancies at the mall remained low, at under 1 percent excluding head-lease.

No interim distribution per share was made, versus the distribution of 16.13 cents per share at the same time last year, and a final dividend would also not be declared, due to financial relief provided to tenants and to protect long-term sustainability.

Indications at this stage were the group would be at close to a zero taxable income position by year end, he said.

Many tenants had difficulty in meeting rental obligations during the lockdown levels and landlords have had to engage with them and provide rental relief and deferrals. These negotiations were 80 percent to 90 percent complete, said Costa.

The quid pro quo of these negotiations were locking in longer lease terms and allowing the landlord to rebalance the tenant mix, he said.

Retailers had since improved turnovers, and centre foot counts had increased, he said.

Covid-19’s impact on revenue for the six months included rental relief granted of about R100m, and a R33m increase in the provision for doubtful debt.

The weighted average lease expiry profile remained in excess of five years. In-force rental escalations remained strong at 7.4 percent for the South African portfolio.

The tenant retention ratio was at 84 percent.

Some R529m of capital markets debt was raised during August and September 2020.

Accelerate shares closed 1.32 percent lower at R0.75 on the JSE yesterday.