Fourways Mall developers increase funding capacity
CAPE TOWN - Accelerate Property Fund had disposed of a number of properties and more sales would take place as it gathers funding to pay for its share of the massive Fourways Mall that is expected to open in August this year.
“To create funding capacity for the Fourways Mall equalisation, the executive team will continue to optimize the portfolio by disposing of non-core assets,” chief executive Michael Georgious said yesterday (thur) at the release of the group results for the year to March 31.
Several disposals had been successfully concluded post year end. Should the other planned disposals be achieved, loan to value would reduce to about 35 percent, pre-equalisation,
He said the tripling in space to 178 000 square metres at Fourways Mall would be differentiated by its focus on shopper-aiment: offering entertainment, convenience and a “unique” experience aimed at the whole family.
A property sector analyst polled on the mall’s potential to contribute meaningfully to Accelerate’s profit said the development was very big and was coming into a market where real estate fundamentals were not strong.
However, the Fourways node was under-serviced from a large regional shopping mall perspective, with competing mall Sandton City situated about 12 kilometres away.
“In the short term, with that amount of space, they are’nt likely to shoot the lights out, but this will likely change over time,” he said.
Accelerate’s results for the year to end-March 31 were in line with its guidance, with the distribution per share falling to 50.97c from 57.55c.
“We have overcome numerous obstacles and are looking forward to the future prospects. We hope 2019 will mark the bottom of the economic cycle, especially with possible interest rate cuts that will stimulate growth,” said chief operating officer Andrew Costa.
“The launch of Fourways Mall in August is a 10-year vision finally being realized. We believe the re-launch will be a game changer in the greater Fourways node,” he said.
The mall would have about 450 stores on opening and an average anticipated footfall of between 1.8 million and 2 million visitors monthly. The expected weighted lease escalation rate was 8.5 percent per annum, with an anticipated weighted average lease term of 5.8 years.
“The Fourways catchment area is categorized by a stable middle- and upper-income demographic, which has proven more resilient to the tough economic climate,” said Costa.
Accelerate would ultimately hold a 50 percent stake in Fourways Mall on its completion.
To enhance the shopping experience and relieve congestion, R400 million had been invested in infrastructure improvements around the precinct, including road widenings, fly-overs and slipways to improve access and egress, as well as with general traffic flow throughout the node.
Fourways Mall would have about 8 000 parking bays and 52 entrances.
Accelereate’s property portfolio was valued at R12.7 billion, increasing from R12.3bn last year. The increase was mainly due to increased external valuations, and the revaluation of domestic assets.
Vacancies had been reduced to 9 percent from 10.4 percent in 2018.
The focus would remain on tenant retention and introducing new tenants to the portfolio. Partnering with tenants and offering some incentives during these difficult economic conditions far outweighed the cost of replacing tenants, said Georgiou.