ACCELERATE Property Fund, which is selling its offshore portfolio to reduce debt, lifted distributable income sharply to R135.38 million in the six months to September 30 from R11.57m at the same time a year before.
No interim distribution was recommended by its board. The disposal of nine properties in Austria and Slovenia, announced post reporting date, is expected to reduce loan to value (LTV) to about 42 percent from 47.8 percent, chief executive Michael Georgiou said in a statement yesterday.
In the six-month period, revenue (excluding Covid-19 effects) for the group, which has Fourways Mall among its major properties, was static at R513.21m (R511.65m). Covid-19 rental assistance came to R11.23m, well down from R100m the previous year.
Vacancies increased to 17.3 percent from 11.5 percent and were a source of concern, the group said.
Vacancies in the office space were significantly reduced due to letting concluded in the Cape Town Foreshore area. The bulk of vacancies comprise B and C-grade office space and low-rental industrial space, resulting in a vacancy by revenue of 9.5 percent.
Georgiou said the interim period had been one of further consolidation. Measures to improve sustainability included refinancing debt expiries, improving liquidity, granting sufficient rental assistance, extending current and entering into new longer-term leases when granting assistance, rebalancing the tenant mix, right-sizing tenant boxes, exploring alternative uses for space and managing costs.
Rental recoveries, as a percentage of normalised invoiced income, increased steadily with a 91.4 percent recovery for September 2021.
Non-recovered income related mainly to tenants with limited trading capabilities under lockdown level 3, such as entertainment offerings, tenants in business rescue (Ster Kinekor and Virgin Mobile), and smaller tenants still recovering from the effects of Covid-19 on their businesses.
Above-inflation increases in rates and municipal charges as well as increased cost of debt continued to be of concern.
The weighted average lease expiry (WALE) remained strong at 5.9 years (4.9 years excluding the offshore portfolio), but the strong lease expiry profile came at a cost with Covid-19 rental assistance granted to tenants as well as rental reversions on renewal of leases.
“We believe the impact of Covid-19 going forward is starting to dissipate. While the portfolio continues to recover in terms of trading and foot count, we believe it will be another 12 to 18 months before these settle at pre Covid-19 levels. The under-performing economy also continues to persist as a risk with consumer spending,” Georgiou said.
He said the Fourways node remained resilient and this had been evidenced by the positive trading seen at the group’s smaller centres.
“We believe this positive trading will soon include the much bigger retail destinations such as the Fourways Mall super-regional shopping centre.”
The group’s nodal strategy and specifically positive trading at its community centres had buoyed performance, but adjusted level 4 restrictions had still impacted on restaurant sales, entertainment and liquor trade during the period.
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