Accelerate hasn’t locked in a revised related party settlement agreement yet (JSE: APF)

But this won’t affect the rights offer or the release of results

There’s a lot going on at Accelerate Property Fund, with the company trying hard to create as much distance as possible between itself and Michael Georgiou, who is no longer even on the board. The one remaining issue tying the parties together is the related party settlement agreement dealing with claims stemming from the development of Fourways Mall.

The previous agreement lapsed as suspensive conditions weren’t fulfilled in time. The parties are still working towards a new agreement, which they’ve promised is on much the same terms as the last one. Of course, until an agreement is actually signed, there’s no guarantee of anything.

Thankfully, the rights offer of R100 million that opens on 14 July is unaffected by this, with the underwriter reaffirming its position and Investec also confirming that it remains a committed subscriber. This is enough to guarantee that the R100 million will be raised.

Another important point is that the March 2025 annual financials are still expected to be published by the end of July 2025 regardless of whether a new agreement is signed or not.

If the parties do come to an agreement on the current proposed terms, the balances with related parties would be offset to zero and there would be no cash outflow for the group. If the parties don’t come to an agreement, then Accelerate believes that the R800 million related party receivable probably has no reasonable prospect of recovery, leading to a full impairment. They would also have to consider the ongoing validity and quantum of the claims against them, which would otherwise be offset against the receivable if the parties reach an agreement.

In a turnaround story like this, getting rid of remaining overhangs for the share price is a huge priority.

Delta Property Fund’s latest disposal highlights the plight of CBDs in South Africa – except Cape Town (JSE: DLT)

Inner city property is a wild game to play

Delta Property Fund is still in the process of trying to sell off as many properties as possible to reduce debt over time. Occasionally, when they manage to secure a large enough sale, they have to release a detailed circular to shareholders. The disposal of 88 Field Street in Durban is so meaningful that it is a Category 1 transaction under JSE rules!

This disposal is a lucky break of note, as tenants occupying over 73.4% of the property are either confirmed to be vacating the property or likely to depart. This will take the vacancy rate to 82.5%. The Durban CBD has very high vacancies at the moment vs. the national average (22.5% vs. 13.6%) and is a crime hotspot, so tenants aren’t exactly queueing around the corner to get their names on the door. And if they were queueing, their cellphones would probably be stolen anyway.

Whatever the plans of the purchaser are, it will surely be to do something very different to what Delta could’ve done with this property. It’s rare to see such a bearish narrative about an asset from its current owner.

The valuation as at 28 February 2025 was R93.83 million. The selling price is R76 million, so that’s quite a discount. The Broll Auction and Sales process in March 2025 led to this sale and this was the price achieved at that auction.

But here’s the real shocker: the property was originally acquired in 2012 for R120 million. Over 13 years, the value of the property has dropped by 37%! It’s not like the decline of CBDs in cities like Durban is news to anyone, but seeing numbers like these really does drive the point home.

Although every bit helps, the fund will still have R2.37 billion in short-term interest-bearing borrowings and another R1.4 billion in long-term interest-bearing borrowings after applying the R75 million in net proceeds towards debt reduction. This balance sheet is a deep, dark hole.

MAS has finally appointed a corporate advisor (JSE: MSP)

And the results of the shareholder meeting are in

MAS finds itself at the centre of a storm. On one side, we have Prime Kapital and their efforts to pressure the board into following a value unlock strategy, using the cash trapped in the joint venture with MAS as a negotiation tool. On the other, we now have a group of South African asset managers who have posed some very pointed questions to the board regarding historical disclosure around that joint venture agreement.

And theoretically at least, Hyprop is waiting in the wings to make a potential offer to shareholders.

It is very unwise for companies to try and navigate this without assistance, as corporate finance is a specialist field. MAS has appointed Investec as its corporate advisor to help it deal with any potential offers that may emerge for the company, as well other strategic options for the company.

And now for the even more important news: the results of the shareholder meeting that was called by Prime Kapital. Remember, this was a sounding process to ask shareholders for their opinions on whether MAS should start selling off its assets and pay special dividends. If you include Prime Kapital’s votes, then it’s a 50-50 split. If you exclude Prime Kapital, then a whopping 89% of shareholders were against this plan. Ouch.

Prime Kapital is firmly in an “us vs. them” scenario here – and it’s a fight that I think is only just warming up!

Schroder European Real Estate’s portfolio is a mixed bag (JSE: SCD)

There’s no clear uptick here in European property valuations

European property isn’t an easy way to make money, mainly because many of the underlying growth drivers for property (like an increase in the population and economic growth) are sorely missing from the more developed markets in Europe. Southern Europe is the exception right now, with companies like Lighthouse investing heavily in Iberia. And in Germany and the UK, Sirius Real Estate is following an active asset management strategy to buy low and sell high. But as for Schroder European Real Estate, the fund that is the focus of this update – well, there’s no particularly defining feature of their strategy.

This leaves them exposed primarily to the macroeconomic situation in Europe, which the market is doing its best to get excited about as investors look for opportunities outside of the US. When you see European banks trading at elevated levels, it tells you that sentiment has shifted positive. This isn’t filtering down into property values just yet, with Schroder’s portfolio valuation as at 30 June 202 being a mixed bag. Overall, the office portfolio is under pressure and they took a knock from the value of a mixed-use data centre, which is rather interesting. Positives were in the industrial portfolio in France and the Netherlands, along with an important asset in Berlin that was boosted by the conclusion of a new 12-year lease.

Regulatory changes also aren’t helping, like an increase in transfer taxes in France that have impacted valuations.

Nibbles:

• Director dealings:
  • The CEO of Vunani (JSE: VUN) bought shares worth R51.4k.

• I feel ridiculous even writing this, but here we go. Blue Label Telecoms Limited (JSE: BLU) has decided to change its name. You’re going to love this one. The new name is Blu Label Unlimited Group Limited. I truly wish I was joking. Dropping the “Telecoms” part of the name is a precursor to the planned separation of Cell C. The change from “Blue” to “Blu” is to match their branding. Fine, but was it really necessary to add in “Unlimited” and create a daft situation where the latter part of the name is “Unlimited Group Limited” – sigh.

• PSG Financial Services (JSE: KST) announced that GCR has upgraded its credit rating from AA-(ZA) to A+(ZA) (long-term) and from A1(ZA) to A(ZA) (short-term), with a stable outlook. The company notes that this is the fifth rating upgrade received over the past ten years, which is quite something! As I always remind you, the credit rating is not a comment on the current share price and whether it represents a good point to invest. It’s merely a comment on the strength of the business and how well it can service debt. Having said that, it’s of course good news to see this rating heading in the right direction.