{"id":774395,"date":"2024-05-30T08:30:00","date_gmt":"2024-05-30T06:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=774395"},"modified":"2024-05-30T07:32:41","modified_gmt":"2024-05-30T05:32:41","slug":"fourways-mall-owner-debacle","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/774395\/fourways-mall-owner-debacle\/","title":{"rendered":"Fourways Mall owner debacle"},"content":{"rendered":"\n

A cryptic stock exchange news service message by Fourways Mall owner Accelerate Property Fund revealed a messy R57 million transaction.<\/p>\n\n\n\n

On 21 May 2024, after the market closed, Accelerate Property Fund released a statement that Investec had acquired a \u201cbeneficial interest in the ordinary shares of the company\u201d.<\/p>\n\n\n\n

It added that the acquisition was \u201cpursuant to a lending arrangement\u201d and that Investec now owns 8.02% of the company.<\/p>\n\n\n\n

Accelerate said it had filed the required notice with the Takeover Regulation Panel as required by the Companies Act.<\/p>\n\n\n\n

Five minutes later, Accelerate announced that director Michael Georgiou sold 107 million shares at an average price of 53% per share.<\/p>\n\n\n\n

There was no additional information, but it was clear that Investec acquired Georgiou\u2019s shares linked to a lending transaction.<\/p>\n\n\n\n

Protea Capital Management founder and CEO Jean Pierre Verster said it is important to realise that Investec did not buy a stake in Accelerate Property Fund.<\/p>\n\n\n\n

Instead, it was given a stake because Georgiou had a loan with Investec and used Accelerate shares as security. After he defaulted on the loan, Investec took his shares.<\/p>\n\n\n\n

\u201cInvestec now owns 8% of Accelerate. I am sure they would prefer not to own 8% of Accelerate and rather had their loan repaid,\u201d Verster said.<\/p>\n\n\n\n

However, they now own 8%, which is difficult to sell, considering Accelerate Property Fund is a relatively small and illiquid share.<\/p>\n\n\n\n

\u201cIt will be interesting to see whether Investec will become an activist shareholder to find a block buyer for the shares,\u201d he said.<\/p>\n\n\n\n

Verster added that it would have to be a brave investor since he will be buying into the Fourways Mall, which has serious problems.<\/p>\n\n\n\n

\u201cThe Fourways Mall is not well designed, and it is not attracting enough foot traffic. It is the biggest headache in the Accelerate portfolio,\u201d he said.<\/p>\n\n\n\n

He predicted that there \u201cwould be a few more chapters which will be written in the interesting saga\u201d.<\/p>\n\n\n\n

Jean-Pierre Verster\u2019s caution about Accelerate<\/strong><\/p>\n\n\n\n

\"\"<\/a>
Protea Capital Management founder and CEO Jean Pierre Verster <\/figcaption><\/figure>\n\n\n\n

Verster previously cautioned that investors should take note of Accelerate\u2019s \u201ccolourful history\u201d and material related-party transactions.<\/p>\n\n\n\n

Related-party transactions are transactions between two business parties with a pre-existing relationship that forms more than 10% of the company\u2019s turnover.<\/p>\n\n\n\n

Michael Georgiou created Accelerate Property Fund by buying properties from his own personal portfolio and that of family members.<\/p>\n\n\n\n

Since the company was listed, transactions amounting to hundreds of millions have occurred between Accelerate, the Fourways precinct, and other related parties.<\/p>\n\n\n\n

The Fourways precinct is owned by Azrapart and Eriologix. Azrapart is wholly owned by Eriologix, which is wholly owned by the Michael family trust.<\/p>\n\n\n\n

These transactions include payments to Fourways precinct for property management services, additional property acquisitions, and contingent considerations.<\/p>\n\n\n\n

Accelerate shares were used to pay Fourways precinct for property it let to Accelerate within three years from the property purchase date.<\/p>\n\n\n\n

Accelerate had bought so many shares in the Fourways precinct from the founder that it now has to issue a rights offer to fund further operations.<\/p>\n\n\n\n

Verster doesn\u2019t agree with these business practices, which is why he had short positions on the stock in the past.<\/p>\n\n\n\n

Fourways Mall financial problems<\/strong><\/p>\n\n\n\n

\"\"<\/a>
More empty stores at Fourways Mall<\/figcaption><\/figure>\n\n\n\n

Fourways Mall is in serious financial trouble with a large number of vacant stores and numerous structural issues.<\/p>\n\n\n\n

Fourways Mall is the largest shopping centre in South Africa, with a gross lettable area of 178,000 square meters and 350 stores.<\/p>\n\n\n\n

Accelerate Property Fund\u2019s latest results revealed that Fourways Mall\u2019s vacancies increased from 14,349 sqm in March 2023 to 15,109 sqm six months later.<\/p>\n\n\n\n

\u201cManagement continues to focus on reducing vacancies, with the overall vacancy of 17.0%,\u201d it said.<\/p>\n\n\n\n

The mall\u2019s net rent per square meter declined from R298 in 2020 to R262 in 2023. This decline is devastating to a property owner faced with increasing costs.<\/p>\n\n\n\n

Fourways Mall\u2019s fair value declined from R4.8 billion in 2020 to R4.02 billion three years later. This is bad news for the property owners, who are losing money.<\/p>\n\n\n\n

It has reached such a dire situation that Accelerate, which owns 50% of Fourways Mall, is seeking R200 million to address the problem.<\/p>\n\n\n\n

In its latest attempt to improve Fourways Mall\u2019s performance, it appointed Flanagan & Gerard as the mall\u2019s strategic asset manager.<\/p>\n\n\n\n

The Moolman Group has also been appointed to have oversight of property management at the mall.<\/p>\n\n\n\n

The Fourways Mall co-owners have also revealed the targeted strategy to reestablish it as a top-tier shopping destination.<\/p>\n\n\n\n

It includes improved signage, introducing new tenants, deploying full backup power, upgrading security measures, and optimising traffic flow.<\/p>\n\n\n\n

They also plan to revitalise the surrounding area, focusing on taxi services, hawkers, landscaping, and traffic light systems.<\/p>\n\n\n\n

The initial six-month strategy plans to lay a foundation for re-establishing Fourways Mall as a top-tier shopping destination.<\/p>\n\n\n\n

\n\n\n\n

Read: South Africa kisses over 500 businesses goodbye<\/a><\/strong><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

A cryptic stock exchange news service message by Fourways Mall owner Accelerate Property Fund revealed a messy R57 million transaction.<\/p>\n","protected":false},"author":10,"featured_media":774229,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[19940,19746,1498,19967,19973,19972],"class_list":["post-774395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-accelerate-property-fund","tag-fourways-mall","tag-investec","tag-jean-pierre-verster","tag-michael-georgiou","tag-takeover-regulation-panel"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=774395"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774395\/revisions"}],"predecessor-version":[{"id":774408,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/774395\/revisions\/774408"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/774229"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=774395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=774395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=774395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}