Accelerate Property Fund has secured a management deal for Fourways Mall, South Africa's largest shopping centre, with a new agreement that could see its property managers acquire up to 15% stake in the R8.4bn mall. The deal is with Flanagan & Gerard Frontiers and Luvon Investments, a company linked to the Moolman family. This agreement comes after an earlier management deal fell through in 2024.
The joint owners of the mall, Accelerate and Azrapart, have signed the new agreement, pending shareholder approval. However, Azrapart remains under business rescue. The new agreement aims to regularise the appointment of F&G and Luvon, which have managed the mall since February 2024. Since taking over management, the team has successfully reduced vacancies from 18.8% to 6.6%.
Under the management team's leadership, tenant turnover has increased from R226.3m to R365.2m, and average trading density has risen from R1,816/m² to R2,711/m². These improvements have enhanced the centre's performance, and Accelerate seeks to build on this turnaround. The company and Azrapart's business rescue practitioners recognise the value added to the mall by the managers.
Fourways Mall spans about 180,000m² of lettable space and comprises roughly 400 stores. Accelerate's 50% stake was valued at approximately R4.2bn at the end of March. The agreement includes a performance-linked upside fee that can be settled in cash or through an interest in the mall. This fee structure incentivizes the management team to continue improving the mall's performance.
The management team has been granted a call option to acquire up to 15% of the centre, with the purchase price linked to its net operating income. This arrangement aims to sustain the momentum and drive further growth at Fourways Mall. By retaining the current management team, Accelerate expects to unlock the mall's redevelopment potential.
To move forward with the deal, Accelerate will seek shareholder approval for the agreement and the mechanisms that could alter the mall's ownership structure. An undertaking from a shareholder representing 50.7% of Accelerate's shares has already been secured in support of the resolutions. This backing demonstrates confidence in the deal and its potential to benefit the company.
The successful implementation of this deal could set a precedent for similar partnerships in the South African property sector. As Accelerate Property Fund continues to nurture the growth of Fourways Mall, investors and stakeholders will be watching closely to assess the impact of this strategic decision on the company's performance and the mall's continued redevelopment.
Key points
- Accelerate Property Fund seals management deal for Fourways Mall, offering property managers up to 15% stake.
- Property managers reduced vacancies from 18.8% to 6.6% and increased tenant turnover from R226.3m to R365.2m.
- The deal is pending shareholder approval, with 50.7% of Accelerate's shares already in support of the resolutions.
