Andrew Costa, the chief operating officer of Accelerate, said yesterday that they were looking at developing between 400 and 600 sectional title units on property the fund owned behind its Buzz Shopping Centre on Witkoppen Road in Fourways.
Costa said the fund was also about to kick off a huge development on the Foreshore in Cape Town that would comprise vehicle showrooms at ground level and about 17000m² of commercial offices above it in the first phase, with the second phase comprising residential and a hotel.
He said this development would take place on a site in a block the fund almost entirely owned where the Oceana and Bytes head offices were located.
“We own about six buildings, almost a whole block. The A-grade buildings that are there are staying, but we own another four buildings and a parking lot in front of them where we are going to do a huge development,” he said.
Costa was unable to comment on the investment in the development, adding they were engaged in costing.
He said they would probably be in the ground with this development in January next year.
Costa said residential development was new to Accelerate, and it might look to partner with an entity that specialised in residential projects for the Cape Town and Fourways developments.
He said they were looking to start construction on the Fourways residential project “in the short-term future”, which would comprise predominantly two-bedroom units that would probably be priced at about R800000 to R1.3million.
But Costa stressed the Fourways Mall redevelopment remained a key focus for the fund. Costa said Accelerate would own up to 50percent of the about 178000m² redeveloped super regional shopping centre, which was being developed privately by Accelerate chief executive Michael Georgiou.
“We own the mall at the moment and believe that once the redevelopment is done, the (existing) mall will contribute about 40percent of the income, with the new gross lettable area created contributing about 60percent of the income.
“Accelerate has the right to buy up to 50percent of the income at 8percent cap (capitalisation) rates. If you think super regional malls are valued at about 6.5percent cap rates, we are scoring quite nicely by buying by up to 50percent at 8percent cap rates,” he said.
Costa said this development was structured in this way because the redevelopment involved too much risk when Accelerate listed as a new real estate investment trust.
“As it’s structured at the moment, we don’t have any risk because we are not putting up any of the money for that development,” he said.
Costa said the redevelopment would probably be fully completed by April next year, and open in phases.
“It’s nearing completion at the moment. We are 93percent pre-let on the entire development and have offers on the remaining space. Of that, 65percent are national and 15percent are international tenants,” he said.
Accelerate yesterday reported a total distribution of 57.56cents a share for the year to the end of March, which was in line with its guidance.
The value of the portfolio grew by 6percent to R12.3billion from R11.6bn.
Vacancies across the portfolio increased to 10percent from 7percent. But vacancies in its retail portfolio, which comprise about 70percent of its total assets and constitute the core of Accelerate’s business, decreased to 5.5percent from 8percent.
Accelerate shares closed unchanged on the JSE yesterday at R5.25.
- BUSINESS REPORT