Property development group Acsion listed on the main board of the JSE last month, becoming the first property fund to offer investors exposure to 100% of its development company.
The first trade opened at R10.80, providing Acsion with a market cap of R4 265-billion.
“This listing marks the next chapter in our growth path and paves the way to achieving our objective of doubling Acsion’s value in the next five years,” Acsion CEO Kiriakos Anastasiadis said.
He explained that Acsion’s net asset value increased by more than 100% a year over the past ten years, adding that, going forward, the company expected to achieve growth of between 20% and 25% growth a year over the next four years.
“We can proudly say that we uniquely offer investors access to 100% of development profits. We have a 17-year history of identifying and extracting value from development opportunities and, with our approved pipeline currently amounting to almost R1-billion, with many future opportunities, we look forward to continuing on this trajectory,” Anastasiadis commented.
He noted that Acsion had a stable income stream and strong balance sheet with a low gearing of 7%, which provides scope for internally funded growth.
“We also currently have access to debt facilities in excess of R1.5-billion, which is sufficient to fund medium-term pipeline growth to support our objective of delivering net asset value (NAV) uplift for investors,” He stated.
Acsion is differentiated from Real Estate Investment Trusts in the sector as the company focuses on the delivery of NAV growth through NAV uplift on completed properties, completed new developments, capital profits on property developments completed for sale, and – to a lesser extent – buying existing properties.
Value engineering focuses on improving upfront feasibility studies, planning, design and construction in an innovative and more cost-effective way, resulting in lower construction costs without compromising on quality.
“Our value-engineering approach enables us to unlock a first-year development yield of between 15% and 20%, which is our key principal requirement to invest in a specific development,” said Anastasiadis, adding that Acsion was considering several development opportunities locally and abroad, which would diversify the company’s portfolio geographically and by sector.
The fair value of the development pipeline is currently estimated at R339.6- million, as these developments are completed; it is expected that this pipeline will contribute about R865-million to the NAV of Acsion.
The current development pipeline, comprising seven secured development opportunities, will differentiate the portfolio into mixed-use and specialist residential assets, with roll-out expected to take place over a three-year period after listing.
Projects developed for ownership include Phase 3of Mall@Carnival, in Brakpan; Mall@Moutsiya, in Limpopo; Phase I of Mall@Ruimte and Commercial@Ruimte, both in Centurion, and Development@Benmore, in Sandton.