Diversified JSE-listed real estate investment trust Accelerate Property Fund has accepted an offer from the Sasol Pension Fund to acquire the Eden Meander Shopping Centre, with a gross lettable area of 31 136 m2 and an adjacent 7 094 m2 vacant land parcel.
The centre is located near the residential hub of George in the Western Cape.
The minimum purchase consideration will be about R521-million, calculated on a 7.5% net income capitalisation rate applied to a 12-month net operating income forecast from December 1 this year.
The final purchase price will be determined following the due diligence process.
“In line with our asset recycling strategy, we believe that disposing of Eden Meander at this attractive yield to a credible counterparty will unlock considerable value for shareholders, as it enables us to strengthen our balance sheet,” comments Accelerate joint CEO Abri Schneider.
Proceeds from the disposal will be allocated towards settling debt and are expected to have a positive impact on the group’s financial ratios, including loan-to-value (LTV) and interest cover (ICR).
Since the financial year end, Accelerate has disposed of the Ford Fourways premises and Leaping Frog Shopping Centre, which reduced its LTV by 1.2% and improved the ICR by 0.1 times.
The disposal of Eden Meander will further reduce LTV by 3.0% to 39.6% and result in a further meaningful improvement of the ICR.
During its financial year ended March 31, Accelerate successfully transferred R146-million of assets and concluded sale agreements of additional disposals with an aggregate value of R292-million.
“The decision to sell this asset was not taken lightly; however, the price achieved coupled with the positive impact on Accelerate’s financial metrics all contributed to the board’s decision,” Scheider concludes.