Accelerate to revise income forecast downwards

ACCELERATE Property Fund, owners of Fourways Mall, the biggest mall in Africa, has revised down its income distribution forecast for its new year due to additional expenses and the weak economy.

The group saw a 10 to 15 percent reduction in distribution per share compared with the 2019 financial year.

The interim distribution per share was expected to be 16 to 22 percent lower compared to 27.26 cents per share at September 30, 2018.

“The company is taking corrective measures to ensure improved quality and long-term sustainability of the fund’s assets, it’s income stream, as well as controlling its operating costs,” a statement said.

Weak economic conditions saw to the low recovery of the South African Listed Property Index which achieved a 1.8 percent return, while the JSE all share index had returned about 4.4 percent to August.

Also, rental reversions on renewal of leases were higher than expected, while additional assistance needed to be provided to tenants due to weak trading environment.

Additional spending on assets such as Cedar Square, the Buzz and Waterford centres in Fourways was required to improve asset quality and to attract new tenants.

Additional spending and marketing for the three-month launch of the recently completed Fourways Mall development had been required, while there had been delays in the Foreshore retail and office development.

“As at end-July 2019, the fund achieved a tenant retention rate of about 98.2 percent by gross lettable area. We have had to manage these with rental reductions, rent-free periods, tenant installation allowances, etc. This trend puts pressure on income; however, it positions the fund well for the future,” the group said.

The share price of the group with a R12.7 billion property portfolio closed 8.42 percent lower at R1.74 on the JSE yesterday.