JSE-listed real estate investment trust (Reit) Accelerate Property Fund has delivered 9.1% year-on-year distribution growth to 53.67c a share for the year ended March 31.

The strong 2016 financial year-end results achieved by the company also included 24% growth in the value of Accelerate’s property portfolio to R8.4-billion and growth of 25.5% in its net asset value to R5.7-billion.

“Accelerate remains focused on maximising rental income and tenant recoveries, reducing vacancies, effectively managing cost, increasing the quality of our property portfolio and creating value through selective acquisitions,” said COO Andrew Costa.

Accelerate added the R850-million KPMG portfolio to its assets, along with four industrial properties valued at R286-million, bringing the number of properties in its portfolio to 61 and its total gross lettable area (GLA) to 520 226 m2.

During the year under review, earnings a share and headline earnings a share marginally contracted to 107.53c and 56.27c apiece respectively, while the gross rental income earned by the company increased from R699-million in 2015 to R819-million in 2016.

Vacancies contracted from 7.52% the year before to 7.13% in the financial year under review, with the weighted-average lease period improving from 2.9 years to 5.1 years.

Further, the Reit successfully refinanced maturing debt through the debt capital markets, resulting in a 42.8% increase on 2015 capital market debt to R1-billion and a decrease in bank debt.

The company’s gearing increased marginally from 35.04% to 35.6%, which, it said, provided some headroom for growth.

“Despite the slowdown in the South African economy and the tough business environment, we are pleased with our ability to enhance the fund through quality acquisitions to optimise returns for shareholders,” Costa added.

The slowing economy, higher inflationary forecasts and instability in financial markets opened up uncertainty in real estate markets and a deterioration in macroeconomic conditions was expected to have a negative impact on the demand for space.

However, Accelerate’s strategy of targeting specific nodes and properties had lifted some of the pressure that rippled across the industry as lacklustre consumption expenditure led to retail consolidation and a muted office vacancy outlook, Costa told Engineering News Online.

Meanwhile, in what Costa described as the most exciting current project for the company, the expansion and redevelopment of Fourways Mall, in Gauteng, was now well under way and remained within targets.

Accelerate was currently expanding the existing Fourways Mall by 90 000 m2, converting the mall into a super-regional shopping centre of 170 000 m2 by 2018.

The first phase, comprising two parkades and the food court, would be completed by year-end, he noted.

“Fourways has been identified as one of the fastest growing and populated areas in Johannesburg.

“Densification in the Fourways area keeps rising with increasing residential developments within the node, increasing retail demand despite current economic circumstances,” said Costa.

Further portfolio-enhancing acquisitions were also undertaken post the financial year, namely the Western Cape-based Portside office building and Eden Meander.

Floors 9 to 18, representing a GLA of 25 127 m2, of the iconic Portside office building in the Cape Town central business district was transferred from Old Mutual Life Assurance to Accelerate in June at a cost of R755-million and an initial yield of 7.5%.

Eden Meander, a newly built multitenanted lifestyle shopping centre, in George, was bought from Laritza Investments for R364.9-million.

Accelerate also sold Gauteng-based noncore retail properties, Rietfontein Pavilion, for R28-million, and Rock Cottage, for R65-million.