JSE-listed Accelerate Property Fund reported distribution growth of 8.1% year-on-year for the six months ended September 30, translating into a distribution per share of 28.77c, up from 26.62c apiece in the comparative period of 2015.

The fund also reported a 17% increase in its portfolio value, to R9.1-billion, bolstered by the acquisition of about 50%, or 25 224 m², of the gross lettable area of the Portside Tower, in Cape Town.

As part of the sale, the fund received a rental guarantee of R110-million to be drawn by Accelerate over an estimated period of five years to ensure a yield of between 7.5% and 10% on the building during the guarantee period. Its overall yield for the six months stood at 9.1%.

Further, the acquisition of the Eden Meander Lifestyle Centre in George, currently 97% let, also added to the fund’s asset base.

COO Andrew Costa pointed out that, as the economy continues to pinch, the fund is considering disposing of some of its smaller B-grade and C-grade office properties, as these, along with smaller outlying retails centres were under pressure.

He explained that as the economy declined, many small business owners and entrepreneurs opted to work from home to cut costs. “This is the space that is a bit of a concern for us.”

However, Costa believed that, given that the bulk of its office portfolio was A- or premium-grade, along with the expanding Fourways node, the fund would be able to weather the storm.

“We have what we consider our core properties in our core nodes, which is what we will not dispose of, even if it is a smaller shopping centre in a core node. At the right price, we will look to dispose some of our noncore assets,” he highlighted.

FOURWAYS EXPANSION
With its key focus falling on the Fourways Mall, in Gauteng, the fund is currently redeveloping the node, a project that is well under way.

About 90 000 m² of retail space will be added to the existing Fourways Mall, with a projected completion date of 2018.

The development is being undertaken by a related party and, upon completion, Accelerate will own 50% of the 170 000 m² super-regional shopping centre.

Phase 1 of the development includes a new food court, anchored by a flagship 4 000 m² Bounce store. This is expected to be completed within the next month.

Costa revealed that the developers were also in talks with Bombela, which is currently looking to expand the Gautrain rail system. As part of the Fourways Mall overhaul, a lake is being drained to form a park. This, Costa said, would be an ideal location for the expansion of the rail system.

During the reporting period, Accelerate earned gross rental income, excluding straight line rental revenue adjustments of R498-million, compared with R417-million for the previous comparable period.

The fund reported a decrease in cost-to-income ratio of 13.96%, largely as a result of lower net property expenses of R27.7-million, compared with R40.6-million for the same period in 2015.

The current Accelerate portfolio split by revenue comprises 66.8% retail, 26.6% office and 6.6% industrial with a focus on the strategic nodes of Fourways Precinct, Charles Crescent, Foreshore and Somerset West.