Diversified real estate investment trust Accelerate Property Fund reported a strong performance in trading densities across all its key retail centres in the year to March 31.
“The group’s continued focus on the settlement of related party matters and property fundamentals in especially its retail portfolio, continued to gain traction, notwithstanding strong macro-economic headwinds,” joint CEO Abri Schneider said in a statement.
“Our focus on managing the portfolio fundamentals bore fruit. We (also) managed to improve leasing activities and reduced the cost-to-income ratio,” he said.
Distributable income came to R166.8 million prior to once off tax deductible items of R110m, compared with R210m reported for the 2022 financial year, a decrease the group said was predominantly driven by the rise in interest rates since February 2022.
“Rental levels across the portfolio as well as vacancies in the B and C grade office space remain under pressure,” said Schneider.
Double digit increases in municipal expenses as well as increased diesel cost due to load shedding had caused significant increases in the cost of occupancy for the group’s tenants and was putting profit margins under pressure.
“We further made headway in strengthening our financial position through the sale of non-core properties,” he said.
Trading densities at Fourways Mall improved 18% from December 2021 to December 2022 from R3 131 per square metre to R3 699 per square metre. Parking revenue increased by 12% year-on-year. Schneider said these figures exclude the benefit of new leasing currently under way.
Eden Meander in George continued to report double digit growth in year-on-year trading densities and turnover figures.
Monthly average trading densities to December 31, 2022 increased 14% to R2 522 per square metre compared to R2 215 per square metre in the prior period. Eden Meander also benefited from strong seasonal trade with average trading densities increasing to R4 752 per square metre in December 2022.
Cedar Square in Fourways showed positive monthly trading density growth of 7.7% to R2 366 per square metre.
“Our strong focus on letting activity reduced vacancies by 4.7% from 21.1% in the prior financial year to 16.4%. At the end of the financial year, Cedar Square had a vacancy of 4.8% with all retail space leased and the remaining office space currently under negotiation.”
Trading at some of the community shopping centres such as the Buzz and Waterford improved to well above pre-Covid-19 levels, with vacancies at both centres at close to zero percent.
Revenue from continued group operations remained stable at R895m (R897m) whilst management focus on costs resulted in a 2.4% reduction in the cost-to-income ratio from 25.8% to 23.4%.
Loan-to-value (LTV) increased marginally from 42.8% to 44.8% predominantly because of an R809m downward fair value adjustment in investment properties offsetting the positive LTV effect of non-core property disposals.
Five properties were disposed of during the year to the value of R146.7m. A further four non-core properties to the value of R292.4m were held for sale with transfer expected in the 2024 financial year. Proceeds from these disposals were allocated towards reducing debt.
BUSINESS REPORT