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ACCELERATE PROPERTY FUND LIMITED - Trading statement and pre-close guidance

Release Date: 30/09/2019 08:45
Code(s): APF     PDF:  
Wrap Text
Trading statement and pre-close guidance

(Incorporated in the Republic of South Africa)
(Registration number: 2005/015057/06)
Share code: APF ISIN: ZAE000185815
(“Accelerate” or the “Company”)


2019 continues to be one of the toughest periods faced by the property industry, with
headwinds affecting performance. While political certainty has firmed up since the beginning
of the year, sluggish economic conditions continue to weigh in on weaker property
fundamentals and performance. The South African listed property sector index (SAPY) had its
worst year on record in 2018, when it suffered a total loss, including share price movement
and dividends of 25,26%. So far in 2019, SAPY’s recovery has been weak. Year to date, SAPY
achieved a total return of 1,8%, while the JSE all share index’s total return has been about
4,4% (22 August 2019). This performance has been driven by weak economic conditions
affecting tenants in all property sectors.

In terms of paragraph 3.4(b)(vii) of the Listings Requirements of the JSE Limited, Accelerate
has adopted distribution per share as its financial results measurement for trading statement

Shareholders are advised that Accelerate anticipates negative distributable income growth for
the year ended 31 March 2020, resulting in a 10% to 15% reduction in distribution per share
(43,32 to 45.87 cents per share) compared to the 31 March 2019 full-year distribution of
50.97cents per share (27.26 cents per share at 30 September 2018 interims and 23.37 cents
per share at 31 March 2019 year-end) .

In the previous financial year the distribution was heavily weighted in favour of the interim
period, consequently the current interim period distribution per share in comparison with the
previous period is anticipated to be between 16% to 22% (21.26 to 22.90 cents per share)
lower compared to 27.26 cents per share at 30 September 2018. In addition, taking into
account the current economic environment faced by South African focused REITS, the board
of directors of Accelerate deems it prudent to retain an additional percentage of Accelerate’s
distributable income for reinvestment in the Company and its core assets in order to ensure
long-term sustainability and profitability. The policy is to retain up to a further 5% of the
distributions per share, depending on the circumstances.

Over and above the continued weak economic and trading environment the following factors
contribute to the revised guidance above:

   -   Higher than expected rental reversions on renewal of leases as well as additional
       assistance provided to tenants necessitated by the current trading environment;
   -   Additional spend on assets such as Cedar Square, the Buzz and Waterford centres in
       Fourways in order to improve asset quality and to attract exciting new tenants;
   -   Cost of exiting an existing expiring cross-currency swap and entering into a new 3-
       year swap at favourable market rates;
   -   Additional spend and marketing for the three-month launch of the recently completed
       Fourways Mall development to ensure the best possible experience for our shoppers;
   -   Delays in the commencement of the Foreshore retail and office development; and
   -   Higher than expected funding cost for the funding of the Fourways equalisation.

The Company is taking corrective measures to ensure improved quality and long-term
sustainability of the fund’s assets, it’s income stream, as well as controlling its operating costs.

The financial information on which this announcement is based has not been reviewed or
reported on by Accelerate’s external auditors.

Accelerate’s pre-close presentation will be available on the Company’s website from
commencement of business on 30 September 2019 at

30 September 2019

The Standard Bank of South Africa Limited

Date: 30/09/2019 08:45:00
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