Accelerate’s Bold Move: Cherry Lane Sale Signals Strategic Shift in South African Real Estate Portfolio

  • Strategic Asset Sale: Accelerate Property Fund Limited announces the R60 million cash sale of Cherry Lane Shopping Centre.
  • Debt Reduction and Reinvestment: Proceeds will be used to reduce debt and reinvest in Accelerate's core property portfolio.
  • Balance Sheet Optimization: The decision aligns with Accelerate's ongoing effort to align assets with current business strategy.
By Lethabo Ntsoane

Accelerate Property Fund Limited, a key player in the South African real estate sector, has recently disclosed the sale of Cherry Lane Shopping Centre, a significant move in line with the company’s strategic business review.

1. Introduction

Accelerate, listed on the JSE Limited (Registration number: 2005/015057/06), revealed the signing of a sale of letting enterprise agreement with Alma Trading CC on 4 December 2023. The transaction involves the disposal of Cherry Lane Shopping Centre, located in Nieuw Muckleneuk Township, Pretoria.

2. The Property

Cherry Lane, part of Accelerate’s retail portfolio since its acquisition in December 2013, was valued at R65 million as of 31 March 2023. The sale, executed for a cash consideration of R60 million, reflects the company’s commitment to optimizing its asset portfolio.

3. Application of Sale Proceeds

Accelerate intends to utilize the full proceeds from the sale to reduce debt and/or reinvest in its core property portfolio, aligning with its balance sheet optimization strategy.

4. Rationale for the Transaction and Balance Sheet Optimization Strategy

The decision to sell Cherry Lane is a result of Accelerate’s ongoing efforts to ensure its assets align with the company’s current business strategy and growth plans. The executive team, while acknowledging the weight of the decision, believes it is in the best interest of the company and its shareholders.

5. Key Transaction Terms

The purchaser, Alma Trading CC, is set to pay a refundable deposit of R1 million into the conveyancers’ trust account within 48 hours of signing the Sale Agreement.

6. Conditions Precedent

The transaction includes a 30-business days due diligence period from the date of signing the Sale Agreement, followed by an additional 30 calendar days for the purchaser to provide guarantees.

7. Information Relating to the Property

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 m²R32.48/m²R32.48/m²
Net Property IncomeR3.58 millionR2.03 million
Weighted Average Lease Expiry0.54 years0.55 years

Directors’ valuation as at 31 March 2023, based on cash flows and forward net income achieved by the Property at the valuation date.

8. Warranties

The seller (Accelerate) has provided warranties and indemnities to the purchaser that are standard for a transaction of this nature.

Cautionary Statement Regarding Forward-Looking Statements

Accelerate issues a cautionary statement regarding forward-looking statements, acknowledging that certain statements in the announcement may be considered forward-looking. While the company believes the expectations are reasonable, no assurance can be given, and Accelerate does not undertake any obligation to publicly update or revise the information provided.

This strategic move by Accelerate reflects the dynamic nature of the real estate industry in South Africa, with companies continually optimizing portfolios to adapt to changing market conditions. The sale of Cherry Lane Shopping Centre underscores Accelerate’s commitment to shaping a resilient and growth-oriented property portfolio.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: Twitter: @NtsoaneLethabo