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Fourways Mall joint-owner writes down properties by R660m

Covid-19 rental relief of over R180m in the year to end March dealt a significant blow to operating income.
The revamped and expanded Fourways Mall is half-owned by Accelerate Property Fund. Image: Suren Naidoo, Moneyweb

Small-cap real estate investment trust (Reit) Accelerate Property Fund has become the latest counter not to pay a full-year dividend, due to significant pandemic pressure on rental income and a R660 million write-down of its investment properties.

Accelerate, which owns a 50% stake of Fourways Mall and the landmark Portside Tower office building in Cape Town, did not report a distributable income for the year ended March 31, 2021.

The other 50% stake in Fourways Mall is effectively owned by the Georgiou family. However, Accelerate’s CEO Michael Georgiou is listed as a major shareholder in the JSE-listed fund.

Accelerate’s latest R660 million write-down brings the total devaluation of its property portfolio to R1.66 billion over the last two financial years (FY 2020: just over R1 billion).

The group’s share price weakened almost 3% and closed at R0.56 a share on the JSE on Wednesday, valuing the fund at just under R670 million.

Accelerate’s decision to retain distributions is aimed at bolstering its weakening balance sheet in the face of the Covid-19 financial fallout.

Read: Accelerate gets debt covenant relief from lenders

Its move not to pay dividends, which was expected, comes as the fund provided R182.5 million in rental relief to tenants most affected by pandemic-related lockdowns during the financial year.

This knock to rental income, together with property vacancies hitting 15%, had a ripple effect on property values. However, the increase in vacancies (from 10% to 15%) excludes the vacancies under a “head lease” structure for Fourways Mall.

Nevertheless, the group pointed out that the Fourways Mall head lease has been reduced from around 22 000m2 to 15 000m2 and that post year-end its overall portfolio vacancy had reduced to 14%.

Reits that have urban mega malls in the country – such as Liberty Two Degrees, Hyprop and Attacq – have been particularly badly affected by property devaluations. However, these groups have comparatively lower vacancies in major shopping centres such as Sandton City, Canal Walk and Mall of Africa.


Despite the sale of properties during FY2021, Accelerate’s loan-to-value (LTV) or gearing level deteriorated.

“Fair-value adjustments include the R660 million write-down in investment properties as a result of Covid-19 impacts, as well as a positive mark-to-market revaluation on swaps of R63 million,” the group revealed in a results media statement.

“This increased LTV from 46% to 48.5% in the year under review is due to additional valuation write downs counteracting the effects of property sales, whilst the interest cover ratio remained stable at 2 times,” it added.

Accelerate pointed out that revenue for the reporting year reduced from R1.09 billion to R742.7 million, mainly due to Covid-19 rental relief assistance and a negative straight-lining rental adjustment of R 78 million.

“The financial year ended 31 March 2021 has no doubt been one of the most challenging in Accelerate’s history as a listed company,” Georgiou said in a media statement.

“Notwithstanding the structural shifts within the sector and Covid-related headwinds, we have used this time to stabilise the fund and are busy positioning it for growth as the economy starts to recover … Considering the third wave we are currently operating under, this recovery will largely depend on effective vaccine rollouts,” he added.

The group however noted that it expects “another difficult 12 months” considering the third Covid wave, slow vaccine rollout and continued consumer pressure.

“For us to achieve our goals, we have to execute in two areas, namely the selling of non-core assets and secondly, the unlocking of additional income and value on existing assets,” Accelerate’s chief operating officer Andrew Costa said.

Read: Will Fourways Mall deliver dividends for Accelerate?

“In 2018, we embarked on our balance sheet strengthening exercise in anticipation of payments we would have to make for the equalisation of ownership at the redeveloped Fourways Mall. Since then, we have successfully disposed of R1.3 billion worth of assets,” he pointed out.

“In 2020 we completed disposals worth R188 million with approximately R200 million in disposals currently awaiting transfer, whilst R759 million of non-core assets remain in our disposal pipeline.”



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The write downs will continue for a few years to come. All the large scale asset owners cannot help themselves but over-value their assets, until there is not enough demonstrable net income to justify their valuations.

Call it short term management incentives over statutory truth.

management are repaying the bonuses they took for writing up the assets, aren’t they?

how dare you ask Johan?

They worked very hard with so much personal sacrifices during these trying times..they earned their money! Hahaha

Ryk take notice:
Where the Georgiou Greeks are involved, it couldn’t be otherwise. They took a poorly maintained property portfolio, cut and hide property operational expenses to the bone, manufacture property net income by attaching so-called head leases backed by some distant family trust as an illusion. To the unsuspecting investor this unenforceable, inflated income streams seems secure, resulting in sky-high, miraculous (but very questionable) valuations. Then list the portfolio at a time when commercial property REITS are performing very well – and liquidate some of the family’s equity at huge profits.

And then comes the old tricks again – thereafter devalue the properties to the bone and let the son or some hired help sell the properties one by one back to a hidden structure of the father at rock bottom prices. Check the deeds office for lots of such orchestrated sold and bought back properties by the same ring-fenced gangs (pre-listing and post-listing). Circle transactions with no purpose but to enrich on the one hand and to destroy on the other hand.

The write downs will continue for a few years to come. All the large scale asset owners cannot help themselves but over-value their assets, until there is not enough demonstrable net income to justify their valuations.

Call it short term management incentives over statutory truth.

When will there be the forensic investigation into how these assets arrived in to Accelerate’s fund at the costs they did illegally.

Be very very careful of Reits they quick to pay themselves huge salaries and bonuses for simply doing their jobs e.g when Rosebank hotel was purchased
But when things go pear shaped the little investors picks up the bill .
Shopping in centres is not going back to where it was NEVEr

The million dollar question still remains unanswered HOW DID ACCELERATE AQUIRE THEIR ASSETS AND HOW DID MR GEORGIO PAY FOR HIS SHARES???? The Zephan/Bosman Visser/Pickvest/Ortotouch scam has not yet been unveiled But the Hawks are investigating by contacting investors for their affidavit to take this scam to the next level. Then the flow of funds of investors money that paid for Accelerate mayority of properties will be exposed after waiting years for righteousness to prevail. The bad fruits are slowly falling from the tree

I doubt this will ever be investigated. Our fin min was Accelerate’s chair through all these shenanigans…

I see quite a few comments about big salaries etc… But many reits top managers earn quite a lot less than other business ‘leaders’ of listed companies.

What’s more disturbing and not discussed enough is the MASSIVE increases in costs to run properties. Rates, maintenance, generators and solar because there is no power etc + the complete lack of economic growth.

That’s the real issue eating up income… Not a handful of directors.

I am a bystander in all of this. Used to be a fairly regular visitor to the ‘old’ Fourways Mall.

I have paid one visit to the ‘new’ version. That’s enough for me.
I did not need any qualifications to come to the conclusion that the ‘new’ mall is simply a bad idea.

End of comments.



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