Accelerate Property Fund gets off to a good start
Investors expecting strong income returns, especially after Fourways Mall reopens as Africa's largest mall
Accelerate Property Fund has made a good start to 2019 with investors snapping up its shares, expecting a strong reopening of the group’s Fourways Mall, the biggest shopping centre in Africa.
The company’s share price was R4 at close of trade on Tuesday, 21.21% up year to date, having gained momentum after it struggled in 2018.
Howard Penny of Capricorn Fund Managers said the stock had begun to recover after falling 57% from 2017 highs. But he said the counter was still down 37%.
Penny said it was trading at a dividend yield of more than 13%, which meant investors were receiving income and this was driving demand.
The FTSE-JSE SA Listed Property index, meanwhile, is up 4.33% on a capital basis this year. It lost 31.87% not including dividends last year and 25.26% with them included. This was its worst performance in more than 20 years.
Other shopping centre owners have also gained this year with Hyprop Investments up 8.9% and Resilient up 3.5%.
Keillen Ndlovu, head of listed property funds at Stanlib, said many stocks were recovering off a low and volatile base.
“We expect total returns to be driven by income as opposed to capital over the next twelve months,” he said.
Evan Robins, a portfolio manager at Old Mutual Investment Group, said Fourways Mall was set for initial success as it would serve the Fourways node, which was densifying quickly. He said people living in the node had never had access to a super regional mall before.
Accelerate COO Andrew Costa said investors had begun to show support for Accelerate again and that stock sales had stopped.
He said that since Accelerate listed in 2013 its executive management had staked its future on the success of the Fourways node, given that its largest assets, including the flagship shopping centre, were there.
The mall was forecast to be finished in September 2018, but it had faced some delays. Costa said the overhaul of an asset of its size was difficult to complete in a weak economic environment.
He said Fourways Mall would be worth about R9bn and 178,000m² in size when it was completed, making it the largest mall on the continent. The next biggest mall would be Menlyn Park at 169,000m².
Fourways Mall will have about 450 stores including SA’s first KidZania children’s entertainment concept. It is scheduled to relaunch on April 25. Before the additions, the mall was 64,000m².
The market would want to see how the mall performed during its first year since being relaunched, said Jay Padayatchi, executive director at Meago Asset Management.
“It is quite unfortunate that it is coming online during a period when consumers are taking strain and retailers are under pressure,” he said.