The Citizen (KZN)

Big mall needs R200m

OWNER WANTS TO SETTLE DEBT, REPOSITION SHOPPING CENTRE Obscure entity will underwrite up to R200m of rights offer.

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Accelerate Property Fund, the owner of 50% of Fourways Mall, has asked existing shareholde­rs to stump up as much as R200 million through the issue of new shares.

It needs these funds to enable “the reposition­ing of Fourways Mall” and “to settle existing debt”.

Each of the co-owners (the other 50% is owned by Azrapart, which is owned by Michael Georgiou) will invest R200 million to turn the struggling super-regional mall around.

Fourways Mall is battling elevated vacancies – over a quarter of the 450 outlets at the centre were vacant, according to a Moneyweb investigat­ion in January.

Officially, vacancies are 15 000m2 (as at the end of last year), but this excludes any under the head lease signed between Accelerate and the developers.

Some wings have been unlet since the “new” mall opened in August 2019, about six months before lockdown.

It appointed Flanagan & Gerard, which developed Ballito Junction, Morningsid­e Shopping Centre and Nicolway, as managing agents last year to help fix the tenant mix.

The plan is to double down on the family orientated aspects of the centre, but whether R400 million will be enough to turn around the mall’s fortunes remains to be seen.

Accelerate’s rights offer will be highly dilutive to existing shareholde­rs. Its market capitalisa­tion is just below R850 million, with its share price hovering around

60c. A total of 500 million new shares will be issued at 40c (in a ratio of 38.5 for every 100 shares held). It doesn’t have much choice, however.

Accelerate stressed that its “board opted for a rights offer in lieu of other capital raising options, such as an issue of shares for cash, to allow as many shareholde­rs as possible to participat­e and avoid dilution”.

It has been steadily selling assets since 2020 to raise funds to pay down debt.

It has sold its European property portfolio, two properties in Montague Gardens (Cape Town), the Ford Fourways building, The Leaping Frog Shopping Centre in Fourways, Cherrylane Shopping Centre in Pretoria and two properties near Kramervill­e in Sandton.

Last year, it also disposed of arguably its jewel, Eden Meander Shopping Centre in George, for R530 million.

At the end of September, which

was prior to this disposal (and the two in Sandton), Accelerate said its total portfolio was valued at R9 billion.

Total debt was at R4.4 billion, with short-term debt comprising R1.9 billion.

It says it has “received funding terms to extend R1.1 billion of these expiring facilities” and a “significan­t portion of the remaining short-term debt will be settled through the proceeds of asset sales and corporate action”.

Following the planned disposals between September and March, it expected its loan-to-value to decrease by nine percentage points to 38.5%.

Ownership

The largest shareholde­r of Accelerate is no longer Michael Georgiou (29.13%). Rather, an obscure entity, K201633608­4 (South Africa), holds 31.07%, as of January. It is owned by iGroup and linked to Castleview Property Fund.

Castleview’s chief executive James Templeton, who is also former CEO of JSE-listed Emira Property Fund, is on the board of Accelerate. It originally acquired a stake in Accelerate in 2021 (8.6%) and has increased this since then.

K201633608­4 will underwrite up to R200 million of the rights offer, which is intriguing.

Some shareholde­rs may not follow their rights, which will mean it increasing its stake in Accelerate.

It remains to be seen whether Nedbank, which owns 5.54% of Accelerate, will put another R16.6 million into the fund.

More importantl­y, will Georgiou follow his rights (which will cost R87 million)?

 ?? Picture: Moneyweb ?? NO TENANTS. Visitors to the centre can clearly see just how much vacant space there is. Some wings have been unlet since the ‘new’ mall opened in 2019, about six months before the lockdown.
Picture: Moneyweb NO TENANTS. Visitors to the centre can clearly see just how much vacant space there is. Some wings have been unlet since the ‘new’ mall opened in 2019, about six months before the lockdown.

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