Accelerate CEO Andrew Costa
JSE-listed Accelerate Property Fund on Wednesday boasted strong financial results for the year ended March 31, with its year-on-year distribution per share up 7.3% to 57.75c apiece.
Since listing in December 2013, its portfolio has grown from R5.5-billion, at a share price of R4.88 apiece, to R11.6-billion with a closing share price at March 31 of R6.73 apiece.
In an interview with Engineering News Online, Accelerate CEO Andrew Costa noted that, while the local commercial property market has shown considerable resilience in the tough trading environment, which boosted the company’s results, “resilience only lasts so long and we are starting to feel the effects of the downturn. No one is bulletproof forever,” he noted.
However, he said the property fund’s “unique nodal strategy”, which includes the Fourways Mall redevelopment, had held the company in good stead in the last two years.
“The company focuses on nodes that are deemed to have good economic fundamentals and superior growth potential, allowing for economies of scale within these nodes, where any investment in improving specific properties, infrastructure or services is to the benefit of other assets owned by the company in the same area.”
Costa noted that the Fourways development was also well under way, with the trampoline park Bounce and the food court opened during the reporting period.
Infrastructure upgrades in excess of R280-million were also under way, including a flyover from Witkoppen road directly into the new multilevel parking.
Nevertheless, he pointed out that the company expected to be “in for a tough time”, as consumers were under pressure, which impacted on retailers.
As such, Accelerate would continue focusing on enlarging its European portfolio. In the year under review, the fund acquired a portfolio of nine single-tenant net lease properties in Austria and Slovakia. “We spent a year developing this portfolio, investing in single-tenant, long-term leases,” Costa highlighted.
He added that the company aimed to eventually have around 25% of its asset value offshore. “The returns in Europe are attractive, with Austria having around 2% of disposable personal income.”
Paired with this, Costa said Accelerate would look at slowing down its acquisitions in South Africa, rather focusing on redevelopments and “plowing capital into our existing nodes and properties”.
Meanwhile, with rental growth and escalations also coming under increased pressure, Accelerate would continue focusing on reducing its vacancies, which marginally decreased from 7.1% to 6.9% year-on-year.
The weighted average lease period also improved from 5.1 years to 5.6 years during the reporting period, with the company’s cost-to-income ratio of 16.9% in line with the market.