Table of Contents
Key Points
- Accelerate Property Fund is negotiating the sale of five properties, including Portside Tower, to reduce debt and recover from financial strain.
- Recent asset sales raised R564 million ($30 million) to reduce debt, with further transactions expected to improve interest coverage by February 2025.
- Michael Georgiou reduced his stake in Accelerate from 29% to 21% in May 2024 due to financial obligations and a forced sale by Investec.
Accelerate Property Fund, a Johannesburg Stock Exchange (JSE) listed Real Estate Investment Trust (REIT), partly owned by South African real estate mogul Michael Georgiou, is negotiating the sale of five properties in a bid to recover from financial strain, particularly from its troubled Fourways Mall, and reduce debt.
The five properties under negotiation for sale include the iconic Portside Tower, Cape Town’s tallest building, as well as Buzz and Waterford Shopping Centres, Oceana—headquarters of the Oceana Group in the Foreshore—and the adjacent Thomas Pattullo building.
These properties were reclassified from investment properties to non-current assets held for sale in Accelerate's financial results for the six months ending Sept. 30, 2024. The properties' value has been adjusted to fair value less the cost to sell, in line with the ongoing negotiations and the willing buyer, willing seller principle.
Accelerate reduces debt through strategic sales
Accelerate’s portfolio includes premium properties with long-term leases and strong tenants, such as Cedar Square, The Buzz, Waterford, BMW Fourways, and 50% of Fourways Mall. Recent asset sales, including 9 and 10 Charles Crescent, Brooklyn Place, Eden Meander Shopping Centre, and 610 Voortrekker Road in Brakpan, raised R564 million ($30 million) to reduce debt.
The fund also transferred 89 and 99-101 Hertzog Boulevards, reducing debt by R69.8 million ($3.78 million). Sales of Pri-movie Park and 1 Charles Crescent are complete, pending Competition Commission approval. Beacon Isle, Valleyview, and Cherry Lane sales are finalized, with transfers expected by February 2025. Proceeds will further reduce debt and improve interest coverage.
As of Sept. 30, 2024, the fund's net debt is R3.7 billion ($200 million), with R3.3 billion ($180 million) maturing on Mar. 31, 2025. Some notes under the JSE’s domestic medium-term note program will expire in February. A significant portion, R1.8 billion ($100 million), is from the DMTN program, with the remaining R1.2 billion ($65 million) owed to Rand Merchant Bank, part of FirstRand. Discussions to renew and extend these facilities are ongoing.
Major stakeholder Georgiou cuts fund position
Michael Georgiou, one of South Africa’s largest private property owners, was forced to sell part of his stake in Accelerate Property Fund in May 2024. The R56.9 million ($3.1 million) sale was triggered by financial obligations under a pre-existing loan agreement.
Georgiou sold 107 million shares, which were seized by Investec. The bank, led by Fani Titi, exercised its rights under the agreement. The shares were sold at R0.53 ($0.029) each. As a result, Georgiou’s stake in the fund dropped from 29% to 21% as of April 12, though he remains a major shareholder.
