Accelerate Property Fund Faces Delisting Threat Over Delayed Financial Results

The JSE-listed Accelerate Property Fund has announced another delay in publishing its financial results, putting the fund at risk of being delisted from the Johannesburg Stock Exchange. This marks the second postponement for Accelerate, which owns notable properties such as Fourways Mall and various others in Gauteng and the Western Cape.

On July 9, Accelerate informed its shareholders that the finalization of its annual financial statements for the year ending March 31, 2024, had been delayed. These results were initially scheduled for release on July 10 but were rescheduled to July 15. Due to the continued delay, the JSE warned that Accelerate’s listing is under threat of suspension and potential removal if it fails to publish its results by July 31, 2024.

On July 16, Accelerate reported further delays, missing its own deadline once again. “Shareholders and noteholders are advised that there is a further postponement of the publication of the company’s audited financial results for the year ended 31 March 2024,” the company stated. The postponement is due to delays in finalizing the audited annual financial statements and obtaining the auditors’ sign-off. Accelerate anticipates releasing the financial results by July 21, 2024, which would still meet the JSE’s deadline and avoid suspension.

Missing results publication deadlines is often viewed as a “red flag” for a company. Last year, Sasfin Holdings faced a similar situation, with analyst Casparus Treurnicht emphasizing the seriousness of missing reporting dates, labelling it a “major” concern.

The delay in publishing its results comes as Accelerate grapples with significant financial challenges at its flagship asset, Fourways Mall. Although the mall, 50% owned by Accelerate, underwent a major revamp and relaunch in 2019 to become the largest mall in South Africa, it has struggled with high vacancy rates and declining net rent per square meter. These financial difficulties have contributed to a nearly 25% drop in Accelerate’s share price over the past six months.

To address these issues, Accelerate has outlined a plan to save Fourways Mall, including a proposal to raise R200 million from its existing shareholders through a rights offer. The company intends to use these funds to pay off debt and improve its financial position, particularly regarding Fourways Mall.

In 2023, Jean-Pierre Verster, founder and CEO of Protea Capital Management, advised shareholders to exercise caution with Accelerate Property Fund. Verster pointed out the fund’s “colourful history” and its involvement in significant related-party transactions, such as purchasing properties from companies owned by its founder, which now necessitates a rights offer to fund further operations.

Additional red flags emerged earlier this year when Investec became a major shareholder in Accelerate under unusual circumstances. On May 21, 2024, Accelerate announced that Investec had acquired an 8.02% beneficial interest in the company’s shares, following a lending arrangement. Shortly after, Accelerate’s director, Michael Georgiou, sold 107 million shares at an average price of 53 cents. It is speculated that Investec acquired Georgiou’s shares as part of a lending transaction, implying a possible default on a loan by Georgiou.

As Accelerate navigates these challenges, it remains to be seen whether the fund can meet its revised deadline and avoid suspension from the JSE.

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