Bank now owns 8% of Accelerate after taking possession of shares.
Michael Georgiou, a non-executive director at JSE-listed Accelerate Property Fund, was forced into a share sale earlier this month which saw 107 million shares in the group disposed of. The shares were effectively seized by Investec, which the fund says exercised “its security rights in terms of an existing lending agreement”.
The shares were disposed of at an average price of 53c, with the total value of the transaction at R56.9 million. Following this, Investec now owns 8% of Accelerate, whose main asset is a 50% stake in Fourways Mall.
The timing of this transaction (which occurred on 17 May) is interesting as the group is in a closed period as it is busy raising R200 million to fund upgrades and the repositioning of Fourways Mall through a rights offer that opens on Monday (27 May).
Accelerate notes that “no clearance to trade was required to be obtained” by Georgiou “as he had no discretion on the trading of the shares”.
The forced sale equates to more than a quarter of Georgiou’s 29% shareholding in Accelerate as at 12 April. His stake is now 21%. The fund notes in the rights offer circular that Georgiou’s shareholding (then 390 million shares) is “pledged as security to a funding bank”.
Following this development, there will be fresh questions about whether Georgiou will be able to follow his rights in the R200 million rights offer at all. He will need more than R42 million to do so. If he doesn’t, he will see his stake in the group being diluted to below 15%.
The timing is not great for Investec either as it will need to decide whether to follow its rights too.
The remaining 50% of Fourways Mall is owned directly by Azrapart, an entity controlled by Georgiou.
The co-owners have appointed Flanagan & Gerard as strategic asset managers and have also enlisted Moolman Group in an effort to turn around the struggling mall.
In December, Accelerate said vacancies at Fourways Mall were “stable” at 17%. In total, around 15 000m2 is vacant, but this excludes any empty space under the head lease signed between the mall and the developers. This expires in November this year.
The mall has a noticeable number of vacant stores. Entire wings of the centre have not been let since the redeveloped property opened in 2019.
According to reports, the plan includes improved signage in the mall, the introduction of “vibrant” new tenants, improvements to parking area lighting, enlarging parking bays and optimising traffic flow. The owners plan to double down on the family-orientated aspects of the centre, but the R400 million in total that is to be spent is not an enormous amount of money considering the size of the mall.
Accelerate has been selling assets to pay down debt as it battles to fix Fourways Mall.
It has disposed of its European property portfolio, two properties in Montague Gardens (Cape Town), the Ford Fourways building next to The Buzz, The Leaping Frog Shopping Centre in Fourways, Cherry Lane Shopping Centre in Pretoria and two properties near Kramerville in Sandton.
It also sold prized asset Eden Meander Shopping Centre in George for half a billion rand last year. Once various disposals are complete, the fund’s loan-to-value will reduce by nine percentage points to 38.5%.
Accelerate’s share price is down 45% over the past year. Over a five-year period, it has lost 85% of its value.
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