Amid an operating environment that remained challenging and which drove a focus on cost control, real estate investment trust (Reit) Acsion – a relative newcomer to the JSE – recorded revenue of R215.4-million, a net profit after tax of R96-million and a net asset value (NAV) of R10.42 apiece in the six months ended August 31.

The company’s existing investment properties – valued at R3.25-billion at the time of listing – comprised six predominantly retail developments strategically located in Gauteng, Mpumalanga and Limpopo, with an aggregate gross lettable area (GLA) of 188 716 m2.

The tenant profile by GLA comprised 72% national tenants, 15% seminational and 13% line and other franchises.

Speaking to Engineering News Online on Thursday, CFO Pieter Scholtz reported that the trust had started construction of four of the developments that were included in its R1.98-billion development cost pipeline at the time of listing.

These included Acsiopolis, the Mall@55 and Trade 55, in Gauteng, and the Mall@Moutsiya, in Limpopo.

It had also started on a new development, the Mall@Mfula, in Mpumalanga, which was not previously included in the reported pipeline.

During the review period, the company also completed the Hyde Park Terrace development, in Gauteng, with the sale of units in this development continuing “in line with expectations.”

The construction of Phase 3 at the Mall@Carnival, in Gauteng, was, meanwhile, nearing completion and, subsequent to the reporting period, opened its doors for trading on September 24.

SOLAR SOLUTION
Acsion also installed its first R16-million solar solution at the Mall@Mfula, which was expected to generate around 1 MW of electricity and significantly reduce the development’s current reliance on municipal power.

“Depending on the success of this project, it is likely that additional solar projects will be installed at some of the larger existing developments as well as be
incorporated in suitable new developments from the planning phase. It is expected that these projects will add significant NAV to shareholders,” said Scholtz.

Looking to its financials, Acsion delivered net profit after tax attributable to ordinary shareholders of R96-million, equating to basic and diluted weighted earnings a share of 24.31c and weighted headline earnings a share of 24.18c for the six months under review.

Mortgage bonds increased from R198-million in February  to R220-million in August, mainly as a result of the Mall@Carnival Phase 3 extension and the start of construction at AcsiopolisP

Meanwhile, in terms of vacancy levels, tenant relocations at the Mall@Carnival and Mall@Reds, in Centurion, were completed, resulting in a reduction in the weighted average vacancy level across the portfolio from 5.05% to 3.39%.

DEVELOPMENT SIGHTS
Scholtz noted that the group continued to evaluate a consistent stream of new opportunities, remaining in advanced discussions on certain projects to further enhance capital growth in 2018 and beyond.

In Africa, the fund was currently advancing talks to develop the 50 000 m2 Mall@Maputo, in Mozambique, and had signed a memorandum of understanding with the Mozambican Ministry of Sport, with a formal agreement still to be finalised.

Acsion's effective holding in the development project would be 85%, with 15% held by local Mozambican partners.

“The development is to be completed in partnership with a reputable local Mozambican partner and is in line with Acsion's vision of geographic diversification into Southern African retail.

“There were some delays in this development, due to the extensive change
in government officials and the subsequent need to inform all new officials as to the proposed development,” Scholtz said.

Elsewhere on the continent, he said the fund was looking to take advantage of Zambia's limited available infrastructure for multinational companies, currently advancing talks with a local land owner to codevelop up to 20 000 m2 of office space, in Lusaka.

It was also looking at opportunities in Ghana and Senegal.

“Several potential transactions in Europe were also evaluated during the period under review. However, none of the transactions met Acsion's investment requirements and, as such, no transactions have been concluded as yet.

“We are still exploring potential deals in Germany and Eastern Europe,” noted Scholtz.

PROSPECTS
Remaining focused on the completion of its secured development pipeline
over the next three years, he added that he was confident the group's growth objectives could be achieved, despite a challenging economic operating environment.

Acsion would, meanwhile, also continue reinvesting in its existing portfolio and focus on its development expertise, or “value-engineering” approach, to ensure above-average NAV growth.

“In addition, we will continue to explore further development opportunities in high-growth markets in the rest of Africa and Europe,” Scholtz maintained.

In line with the group's policy, no dividends were declared for the period.