APF | Balancing expansion and contraction
Accelerate Property Fund (APF) reported HY'18 DPS of 28.8c (flat y/y) which was in line with expectations. Like for like net property income growth was commendable at 6.4% y/y with a strong performance from office (+8.1% y/y) and industrial (+7.4%) while retail was negatively impacted by higher costs (+5.4% y/y including the KidZania payment). We estimate that the net impact of its expansion activities (30% increase in assets), KidZania and base period effects offset the organic growth for the period.  In our view the balance sheet remains constrained with an LTV of 43% however Accelerate have outlined avenues available in order to reduce the LTV. In the note we provide an update on the local property portfolio, the recently announced Polish acquisition, potential balance sheet impact from disposals and acquisitions, update our distribution growth forecast and valuation.Accelerate Property Fund Ltd. Accelerate Property Fund Limited is a property fund offering investors the opportunity to own a portfolio of approximately 60 properties across South Africa, including ownership of over two regional shopping centers. The Company operates through three segments: Office, which acquires, develops and leases offices; Industrial, which acquires, develops and leases warehouses and factories, and Retail, which acquires, develops and leases shopping malls, community centers, as well as retail centers. The Company's property portfolio consists of a total gross lettable area (GLA) of approximately 488,040 square meters consisting of over 59% retail space, approximately 26% office space, over 12% industrial and approximately 3% specialized auto dealership component. Its property portfolio includes Fourways Mall, Cedar Square Shopping Centre, KPMG Crescent, Fourways View, The Buzz Shopping Centre, BMW Fourways (Cedar), KPMG Wanooka Place, Fourways Game, Checkers Montague and Kyalami Downs.
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