Accelerate Property Sells Cherry Lane for R57 Million Amid Rising Vacancies

  • Accelerate terminates previous sale, enters new agreement for Cherry Lane Shopping Centre.
  • Property valued at R65 million, sold for R57 million due to rising vacancies.
  • Proceeds used to reduce debt and reinvest in core property portfolio.

Accelerate Property Fund Limited (APF) announced a major update on the sale of Cherry Lane Shopping Centre. The company has terminated the previous agreement and entered a new disposal agreement.

Previously Announced Transaction Terminated

On March 27, 2024, APF announced a Sale of Letting Enterprise Agreement. This agreement was to dispose of Cherry Lane Shopping Centre to Cadastral Assets (Pty) Limited. Shareholders were informed that this transaction will no longer proceed. The agreement has been terminated. However, a new disposal agreement has been made.

New Disposal Agreement

Introduction

Accelerate Property Fund has entered into a new sale agreement with QSPACE (Pty) Limited. This transaction was confirmed on June 10, 2024. The ultimate beneficial shareholder of QSPACE is Herman Zolty. He is not a related party to Accelerate as per JSE Listings Requirements.

Property Details

Cherry Lane Shopping Centre is located at 471 Fehrson Street, Nieuw Muckleneuk Township, Pretoria. Accelerate acquired the property on December 11, 2013. As of September 30, 2023, Cherry Lane was valued at R65,000,000.

Valuation and Sale Price

The property is being sold for a cash consideration of R57,000,000. The indicative valuation of the property for the 2024 year-end results is R60,000,000.

Application of Sale Proceeds

Accelerate plans to use the full sale proceeds to reduce debt. The proceeds will also be used for capital reinvestment into its core property portfolio.

Transaction Rationale

This decision aligns with Accelerate’s strategy to review its assets. The goal is to ensure assets align with the company’s current business strategy and growth plans.

Transaction Terms

The transaction involves an agent’s commission of R1,140,000 plus VAT. This commission is payable to Platinum Hill Property Advisors.

Conditions Precedent

The transaction is subject to a 25-calendar-day due diligence period from the agreement’s signature date.

Property Information

Key details of the Cherry Lane property are provided below:

DescriptionFor the year to 31 March 2023For the six months to 30 September 2023
Gross lettable area (GLA)11,429m²11,429m²
Weighted average rent per m²R68,92/m²R56,42/m²
Vacancy32.3%47.8%
Net property incomeR4,48 millionR2,10 million
Weighted average lease expiry0,54 years0,55 years

New Lease Impact

The figures do not account for a new 10-year lease signed with Builders Warehouse. This lease covers 2,700m² of vacant space and will commence in Q3 2024.

Conclusion

Accelerate Property Fund Limited continues to align its assets with its business strategy. The disposal of Cherry Lane Shopping Centre is a strategic move to optimize the company’s portfolio.