Accelerate Property Fund has published its financial results for the year ended 31^st March 2025, with its Board anticipating ‘stability’ to resume once the full financial impact of disposals and cost optimisation flows through the 2026/2027 financial years.

The Group says that the optimisation of its balance sheet remains its key strategic focus having disposed of eight assets (with a combined GLA of 63 284m² for R694 million) during the year. The proceeds of the disposals, combined with proceeds from a R200 million fully underwritten rights offer, reduced its debt to R2.6 billion, resulting in its SA REIT loan-to-value (LTV) decreasing from 50.3% to 48.3%.

Post yearend, Erf 7 Roggebaai and 1 Charles Crescent (with a combined GLA of 15 547m²) were transferred with the net proceeds of R62.4 million used to settle debt. Sale agreements for a further four properties to the value of R688.5 million (41 719m² GLA and a combined vacancy of 28.8%) have been concluded.

Portfolio vacancy rates decreased from 21.1% in March 2024 to 19.4% by yearend with the eight asset disposals assisting in reducing vacant space by 25 841m². The Group’s weighted average rental across its portfolio decreased to R184.7 per square metre from R207.80 per square metre in the prior financial year due to reversions marginally offset by contractual escalations. The portfolio recorded collection rates of 98.9%.

Accelerate says that Fourways Mall continues to show a strong recovery and operational traction with the appointment of Flanagan & Gerard and the Moolman Group as management. With R144 million capex invested, 12 341m² of vacant space was filled with 32 939m² of leases renewed during the reporting period. Vacancies reduced from 19% to 13.7%.

Accelerate’s rental income declined by 5.8% (R37.3 million) from R646.5 million to R609.2 million largely due to the property disposals which accounted for R50.7 million of the decrease. The Fourways Mall headlease contributed R61.8 million however, rental reversions offset some of these gains.

The Group’s property expenses decreased by R4.6 million to R329.3 million with utility costs having dropped by 11.2% due to the disposals. However, its rates and taxes rose by R13.3 million. Its administrative and other operating costs reduced by 13.5% due to lower staff costs with its legal fees increasing due to the finalisation of sale agreements and restructuring of finance agreements.

The Fund recorded a fair value reversion of R274.3 million – an improvement on the R354.8 million adjustment in the previous year. Derivatives also saw a negative adjustment of R44.7 million, slightly higher than the R41.5 million recorded in the prior financial year. Finance costs dropped by 34.1% mainly due to asset disposals.

In July 2024, Accelerate signed a settlement agreement with entities linked to Fourways Mall co-owner Michael Georgiou, namely Azrapart, the Michael Family Trust, and Fourways Precinct, to consolidate and cancel out nearly R970 million in debt owed to Accelerate with no cash outflow and no outstanding balances for the Fund.

The agreement lapsed in November 2024 due to conditions not met timeously with a new version of the agreement drafted. Accelerate says that to date, Georgiou has not signed the agreement which has resulted in the Fund impairing the full R970.7 million owed, “triggering a major accounting loss.”

“Preliminary legal advice suggests that the Company’s claims against the Related Parties are unlikely to have prescribed. However, certain aspects of the legal position remain under consideration.”

As a result of the debt impairment, Expected Credit Losses (ECL) increased to R1 046 billion, up from R158.1 million in the prior year. Accelerate consequently reported a net after tax loss of R1.3 billion for the year, against a loss of R624.7 million and debt amounting to R799 million in the prior financial year.