Fourways Mall developer Accelerate stocks fall 20% after warning of dividend slump
The stock eased 18.24percent on the JSE yesterday to close at R1.39 as the group warned shareholders that its interim dividend fell sharply to 16.129cents during the six months to end September from 27.26c in the comparative period last year after consideration was given to the asset disposal programme, and additional payment commitments that might arise from the Fourways Mall equalisation purchase price.
The group said revenue for the six months to September 30 fell 6.5percent to R564million compared with the same period in 2018 due to factors related to the tough property market, its directors said yesterday.
It said income pressure arose from higher-than-expected rental reversions, additional assistance to tenants, increase in the cost-to-income ratio, additional spend on assets, costs of exiting and entering cross-currency swops, higher rates and utility costs, delays in the start of the Foreshore development and higher-than-expected funding cost for the Fourways equalisation.
This was in spite of initiatives to reduce costs and fill vacant space.
Its property portfolio was valued at R12.2billion, slightly down from R12.7bn at the end of March 2019. Vacancies reduced to 8.54percent from 9percent.
The cost-to-income ratio increased from costs associated with the launch and completion of Fourways Mall, but the ratio was expected to normalise to between 18 and 20 percent, they said.
“Accelerate maintained a tenant retention ratio of 96.7percent.
"We have had to proactively manage these relationships with rental reductions, rent-free periods, tenant installation (TI) allowances this trend continues to put pressure on income; however, it positions the fund well for the future,” the directors said.
“Unfavourable economic conditions continue to weigh heavily on property fundamentals and, in our view, the property sector will remain under pressure.”
The Fourways equalisation acquisition of R907.8m was partially debt funded (R700m) and partially funded through the offset of loan accounts receivable (R207.8m).
A portion of Accelerate’s debt funding requirements (R125m) was facilitated through bridge loan facilities, which was expected to be settled with the disposal proceeds of non-core properties.
Some R500m of non-core properties was sold after March 31 to reduce leverage and create funding capacity for the Fourways equalisation.
Assets sold include Wanooka Place, Mr Price, The Pines, Glen Gables, East Lynne and Flora Park. A further R599m of asset sales were under way.