Fourways Mall owner selling big Sandton properties

Listed South African REIT and owner of Fourways Mall, Accelerate Property Fund, has been recommended by the Competition Commission to sell two key properties in Sandton.

The commission has recommended that the Competition Tribunal approve the sale of 1 and 5 Charles Crescent in Sandton to property groups Prestige and Emidomax.

Prestige and Emidomax are beneficially owned by Africrest Properties (Pty) Limited and Old Mutual Limited.

According to the Competition Commission, the acquiring groups are property investment holding companies that own, develop, redevelop, and manage office, retail, industrial, and residential properties.

The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market and does not raise significant public interest concerns.

Africrest has made some bold redevelopment moves over the past few years, most notably high-level conversions of office space into residential property.

In 2022, the group completed a major conversion, turning the 30,000-square-metre ex-PwC building in Sunninghill into 700 apartments for middle-income earners.

In the latest deal, the group is set to acquire 1 and 5 Charles Crescent once all approvals are met.

1 Charles Crescent is a 13,700-square-metre office park valued at R50.6 million, while 5 Charles Crescent is the 17,180-square-metre GLA “PriMovie Park” that forms part of Ster-Kinekor’s home base in Sandton, valued at R64 million.

The locations form part of the Accelerate-owned “Charles Crescent” node, which includes five properties. Once the latest sales are finalised, the node will be fully disposed of.

Accelerate previously raised R43 million from selling 9 and 10 Charles Crescent, and Brooklyn Place, which comprise 4,300 sqm GLA, 3,400 sqm GLA, and 2,860 sqm GLA, respectively.

This was part of a wider disposal of properties in its portfolio, which raised R563 million (net of commission), which was used to reduce its debts and improve the fund’s future interest cover ratio.

Future proceeds from sales are expected to be used for the same purpose.

Pinning success on Fourways Mall

Accelerate has pinned a lot of its turnaround hopes on the biggest asset in its portfolio, Fourways Mall, in which it is investing heavily.

Fourways Mall is the biggest shopping mall in South Africa, with a gross lettable area of 178,000 square meters and 350 stores.

The fund owns 50% of the mall, which carries a total fair value of around R7.9 billion.

The mall has struggled over the past few years due to high vacancy levels and lower net rents.

The group noted in its 2024 FY results that it was spending R400 million to upgrade Fourways Mall in a bid to improve its fundamentals, improve its cash flow and reduce vacancies.

The fund appointed new management and a turnaround team at the mall in 2024 to drive further upgrades and strategies to restore its positioning in the area.

For the interim period that ended September 2024, the fund noted a meaningful improvement at Fourways Mall, with the vacancy rate reducing from 19.2% in March 2024 to 17.9% by September.