CAPE TOWN - ACCELERATE Property Fund, which has Fourways Mall as a flagship asset, will not pay a distribution for the periods ending September 30, 2020 and March 31, 2021, the group said in a pre-close update yesterday.
REITS are required to pay at least 75 of distributable earnings to shareholders, but the group said it believed its REIT status would not be affected by the non-payment of distributions due to the lack of distributable earnings arising from Covid-19 relief granted to tenants, offshore profits not yet distributed to it, additional bad debt write-offs and other tax deductible items.
Accelerate’s board had also decided to retain up to 25 percent of distributable income in the future, once the Fund returned to paying distributions.
Real estate came under increased pressure last year as landlords were required to give tenant relief through discounts and deferrals, thereby reducing their income. Many real estate investment trusts reduced or withheld distributions to improve their balance sheets.
“This, in addition to weakening fundamentals the sector has experienced over the last three years, saw the listed property overall return down 34.5 percent for the year, a reflection of the difficulty experienced by the sector,” Accelerate said.
Other headwinds would continue to affect the real estate sector, including failing municipalities and Eskom and its load-shedding programme,” the group said.
The big super-regional shopping malls in the sector were still not back to the pre-Covid-19 levels.
Implementation of the vaccine roll-out was, however, likely to improve consumer and business confidence.
Vacancies in the group’s retail space had remained consistent, with vacancies in the office space reducing slightly.
The vacancy in the Fund’s small industrial portfolio increased due to a tenant going into liquidation. This additional industrial vacancy had resulted in an increase in the overall Fund vacancy by gross lettable area (GLA) of about 1 percent..
Of R595 million of assets held for sale at March 31, 2020, R188m had been completed while R125m was at various stages of completion.
The lockdown and closure of the deeds office as well as the current economic climate was the main reason behind the delays experienced in the transfer of properties, the group said.
Several options to unlock additional value on existing properties were being explored, and the establishment of a storage platform utilising and re-purposing vacancies and excess parking, was well progressed, the group said.
The shoppertainment strategy at Fourways Mall would benefit from improved sentiment as shoppers returned to centres, for the experience, on a more frequent basis.
“By utilising available bulk and re-purposing available space, Accelerate looks to diversify its income by incorporating new offerings, including self-storage and residential, thereby expanding the Fund’s presence in Fourways and dominating the node,” it said.
Accelerate’s share price closed 4.62 percent higher at R0.68 on the JSE yesterday.
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