The Company, which is differentiated from traditional Real Estate Investment Trusts (REITs) focusses on delivering superior net asset value (NAV) growth mainly by enhancing existing properties and completing value accretive developments. For the financial year under review, Acsion achieved net asset value (NAV) growth excluding deferred tax, of 19% on the prior year period, representing R16.20 per share.
Kiriakos Anastasiadis, Acsion’s Chief Executive Officer commented: “We are pleased to have delivered such an excellent set of results. Rental escalations, new leases concluded, focused cost control and the addition of two new developments to our developed investment portfolio bolstered our performance.
“This demonstrates our in-house ability to effectively develop and manage our assets to deliver superior value for shareholders.”
Acsion, one of few development plays in the sector listed on the JSE in December 2014. The eight predominantly retail properties that were developed in-house and from which the Group derives income were valued at R5.1 billion at period end, an increase of 26.6% year-on-year. The portfolio’s weighted average lease expiry by gross lettable area (GLA) was 3.58 years and vacancies (including some strategic vacancies) totalled 5.43% for the period.
Revenue rose 16% to R524.8 million while operating expenses were well contained at R205 million (2016: R211 million) despite the addition of two new malls to the portfolio. The installation and commissioning of solar panels at Mall@Reds and Mall@Carnival during the period contributed significantly to a decrease in electricity costs. Profit ended the year up 42.6% at R812.3 million and headline earnings per share was 47.0 cents for the reporting period (2016: 45.90 cents).
The Company remained largely ungeared, with a loan-to-value ratio of 4.92% (2016:4.13%). In line with the Company’s growth in developments, finance costs increased from R18.5 million to R23.0 million mainly due to the completion and opening of the two new retail developments, the cost of the two solar plants installed and commissioned during the year, as well as the continued development of Acsiopolis and Mall@55.
“Although Acsion’s policy has been to not declare dividends, the Board has proposed a dividend of 12.5 cents per share. This decision was made considering the Company’s strong financial position with gearing of just 4.92% and access to a secured R1 billion facility to fund developments,” remarked Pieter Scholtz, Acsion’s Chief Financial Officer.
During the period, Acsion completed two additional retail developments namely, Mall@Moutsiya and Mall@Mfula. Mall@Mfula which consists of a 18 700m2 shopping centre with a 70% national tenancy opened at the end of November 2016. It provides a complete formal retail offering in Piet Retief, Mpumalanga. Mall@Moutsiya, which opened in August 2016 is a 14 500 m2 development. A petrol station of a further 1 300 m2 will be built later this year.
Construction of Acsiopolis, Acsion’s flagship twenty story mixed use development in Benmore, Sandton progressed according to plan and is set for completion in early 2019. At period end, five parking levels had been completed and the development now exceeds ground level.
The development of phase 1 of Mall@55, a 15 000m2 convenience shopping centre in Monavoni, Gauteng, progressed well during the period with the opening planned for the last quarter of this year. The exceptional location on the intersection of the N14 highway with the R55 provincial route perfectly positions the development for a value/convenience/lifestyle centre which is underrepresented in the catchment area.
In line with its proven track record of township mall development and management, Acsion is extending Mall@Lebo by some 5 000m2 on the back of strong tenant demand. The Group is in the process of finalising certain applications whilst the leasing of the proposed extension is finalised.
Acsion’s flagship super regional mall, Mall@Carnival will also undergo a 5 000 m2 extension during the current financial year.
Other pipeline development opportunities have been identified. The most recent opportunity is Metropolis Mall@Larnaka, Acsion’s first international retail development for which a leasehold over land in Larnaka, Cyprus has been signed. The lease is a 33 year lease with two options to renew of 33 years each. Acsion intends to develop a 40 000 m2 retail centre however a number of approvals are required before construction can commence. The Company trusts that all approvals will have been obtained by the end of 2017. “We are excited about this development which promises to yield returns that at the very least meet our investment criteria,” added Anastasiadis.
“Looking forward, we will continue to focus on effectively managing our investment portfolio while completing our secured developments including value accretive projects in our existing portfolio.
“Acsion’s development expertise and “value-engineering” approach makes it possible to achieve above average NAV growth and we are confident that this can be achieved despite the challenging economic and operating environment,” concluded Anastasiadis.