Distribution caution hits Accelerate’s share price
CAPE TOWN - Accelerate Property Fund’s share price fell 6.5percent to 75cents yesterday morning after it warned it might not be able to pay distributions in its 2021 financial year because of Covid-19’s impact on the commercial property market.
The company, which includes Fourways Mall in its local and European portfolio, also said it would not declare a distribution for the end of the 2020 year to March 31.
This was after distributable earnings plunged to R285.5million in the year, from R475.7m in 2019.
On the 2021 distribution, the board said it would “continue to assess the impact of Covid-19.”
In the year to March 31, revenue fell marginally to R1.05billion from R1.19bn the previous year.
The slide in distributable earnings was driven by additional bad debt provisions and the full accounting of Covid-19 rental reduction on the European portfolio.
An increase in B-grade office vacancies, vacancies in buildings held for redevelopment and additional professional and marketing fees for the Fourways Mall launch also drove distributable income lower.
The cost-to-income ratio increased to 26.2percent from 15.9percent in 2019, because of increased costs associated with the opening and launch of Fourways Mall, and provisions made regarding the recoverability of tenant arrears impacted by Covid-19.
The company’s directors could not be reached for further comment yesterday, but the fund did not expect a significant reduction in long-term rentals streams at its larger retail centres as rentals were at or appreciably below market related rentals.
A balance sheet optimisation initiative saw assets valued at R845m sold to reduce loan to value.
Property sales to the value of R595m were at various stages of completion.
One of Accelerate’s contingent liabilities was Azrapart, the developer of Fourways Mall, which had made a claim of up to R300m against Accelerate arising from capital expenditure spent by Azrapart on the existing letting enterprise. Accelerate intended to evaluate the claim.
Azrapart, according to reports, is a private developer of which Accelerate chief executive Michael Giorgiou is the largest shareholder.
Accelerate recovered to close 3.75 percent higher at 83 cents on the JSE yesterday.