Acucap Properties delivers stellar half-year results

Acucap Properties CEO Paul Theodosiou said management continued to focus on the property fundamentals, and have positioned the fund so that it owns premium-quality shopping centres and offices.

Acucap Properties (ACP) has reported a distribution of 159.89c per unit for the six months ended September 2013 - 5.9% higher than the corresponding six-month period last year and in line with guidance for the full year to end-March 2014.

Retail leases for 34‚853m² were renewed or expired during the first half at an average terminating rate of R131.16/m². Leases were signed over 39‚009m² at an average rate of R136.08/m². The retention rate by income was 60% and these leases were renewed at rentals on average 14.3% higher than expiring rentals.

Acucap Properties CEO Paul Theodosiou said management continued to focus on the property fundamentals, and have positioned the fund so that it owns premium-quality shopping centres and offices.

It said the office market remained under pressure‚ with vacancies increasing from 2% at March 31 2013 to 4.8% at end-September.

In October‚ Acucap announced the acquisition of a 50% undivided share in Greenacres Shopping Centre for R508m at an initial yield of 7.7%. The other 50% of Greenacres was acquired by Sycom.

With a gross lettable area (GLA) of 40‚767m²‚ Greenacres is one of three retail properties that make up a single combined shopping mall with a GLA of 89‚529m²‚ the other two properties being The Bridge @ Greenacres (44‚062m² GLA) in which Acucap owns 27.5%‚ and a standalone Woolworths store owned by Woolworths (4‚700m² GLA).

“Good trading density‚ supported by more than 1-million shoppers a month‚ has resulted in strong interest from all the major fashion retailers at Greenacres to either expand their stores or introduce new brands. Plans will also be developed to upgrade the mall and offer a contemporary‚ easier and more pleasant shopping experience‚ and the intention is to implement these plans as soon as possible after transfer of the property‚” Acucap said.

Acucap intends to fund the acquisition by a vendor placement of linked units.

Property fund manager at Alternative Real Estate Capital Management, Maurice Shapiro, said a key strength for Acucap was its storage business.

"Acucap is the first South African listed property company to venture into self-storage properties. This is a well-established asset class offshore and as South Africa demographics change and we see further urbanisation, there will be a bigger demand for storage space as residences become smaller.

"We believe it is an untapped market in South Africa with good growth potential, and in a short space of time Acucap have grown this small part of their business to 33 sites. Acucap intend listing the self-storage business separately in the next 18-24 months with not less than R1bn in value," Mr Shapiro said.

On prospects‚ Mr Theodosiou said its board maintained previous guidance for full-year distribution growth of between 5% and 6%. For the 2015 financial year‚ growth in excess of 7% is expected.