Serious problems for Fourways Mall owner 

The JSE-listed Accelerate Property Fund has delayed publishing its financial results for a second time, meaning the fund now faces removal from the bourse.

On 9 July, Accelerate – which owns Fourways Mall and other properties in Gauteng and the Western Cape – informed shareholders that finalising its annual financial statements for the year ended 31 March 2024 had been delayed.

These results were set to be released on 10 July, but the company said there had been a delay, and they will now be released on 15 July.

Due to this delay, the JSE said Accelerate’s listing is under threat of suspension and possible removal.

The bourse said that Accelerate’s listing may be suspended if it fails to publish its results on or before 31 July 2024.

On 16 July, Accelerate informed shareholders that further delays in the publication of its results had occurred, meaning the company had missed its own deadline.

“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 said.

“The postponement remains due to a delay in the finalisation of the audited annual financial statements for the year ended 31 March 2024 and the auditors’ sign-off thereon.”

Accelerate said it is anticipated that its financial results will be released no later than 21 July 2024.

If Accelerate makes this deadline, it will still fall within the JSE’s deadline, and the company will not face suspension from the bourse.

However, missing results publication deadlines is typically regarded as a “red flag” for a company.

Last year, Sasfin Holdings was in a similar situation, having missed its reporting deadline.

At the time, Gryphon analyst Casparus Treurnicht told BusinessDay that missing financial reporting dates is a “major” concern. “Even sketchy companies try not to miss these dates,” he said.

Fourways Mall problems

This delay in publishing its results comes amidst Accelerate facing significant financial difficulties at its most valuable asset, Fourways Mall.

Fourways Mall is 50% owned by Accelerate and underwent a major revamp and relaunch in 2019.

While this expansion made Fourways Mall the largest mall in South Africa, it did not help stem the mall’s poor financial performance. Its high and increasing vacancy rates meant a decline in the mall’s net rent per square meter.

This also weighed on Accelerate’s share price, which is down almost 25% over the past six months.

While Accelerate and its shareholders are in a difficult position, the company has outlined its plan to save Fourways Mall.

Earlier this year, Accelerate said it wanted to raise R200 million from its existing shareholders through a rights offer.

The company said it will use this money to pay off debt and reposition its finances, particularly regarding Fourways Mall.

In 2023, Protea Capital Management founder and CEO Jean-Pierre Verster advised shareholders to be cautious about Accelerate Property Fund.

Speaking to Business Day TV, he said Accelerate has a “colourful history” and that the fund is involved with something that always raises red flags – material related-party transactions.

These are transactions between two business parties with a pre-existing relationship that forms more than 10% of the company’s turnover.

Verster said the property fund bought properties from companies owned by its founder, including Fourways Mall.

He said Accelerate had bought so many shares in the Fourways precinct from the founder that it now has to issue a rights offer to fund further operations.

Verster doesn’t agree with these business practices, which is why he had short positions on the stock in the past.

Red flags were also raised earlier this year when Investec, through an odd series of events, became a major shareholder in Accelerate.

On 21 May 2024, Accelerate released a SENS announcement that Investec had acquired a beneficial interest in the company’s shares.

It said the acquisition was pursuant to a lending arrangement and that Investec now owns 8.02% of the company.

Shortly after this announcement, Accelerate announced that its director, Michael Georgiou, sold 107 million of the company’s shares at an average price of 53 cents.

While no additional information was provided on why these shares were sold, it can be assumed that Investec acquired Georgiou’s shares linked to a lending transaction.

In other words, Georgiou defaulted on a loan to Investec, and, as a result, Investec acquired over 8% ownership of Accelerate Property Fund.