ACCELERATE PROPERTY FUND LIMITED - APFE - Notification of a change to the credit rating of the Issuer

APFE - Notification of a change to the credit rating of the Issuer

Accelerate Property Fund Limited
(Incorporated in the Republic of South Africa)
Registration number: 2005/015057/06
Bond company code: APFE
(“Accelerate” or the “Company”)
(Approved as a REIT by the JSE)


NOTIFICATION OF A CHANGE TO THE CREDIT RATING OF THE ISSUER

Noteholders are advised that GCR Ratings (“GCR”) has downgraded the Issuer’s national scale
long-term issuer rating from BBB(ZA) to BBB-(ZA) but maintained the Issuer’s national scale short term
rating of A3(ZA). Concurrently, GCR has downgraded the long-term issue ratings of the senior secured
notes from A(ZA)(EL) to A-(ZA)(EL); with a Rating Watch Negative being assigned to all ratings.

The ratings downgrade reflects continuing weakness in Accelerate’s operating performance, primarily
due to its vulnerability to ongoing pandemic related disruptions given its large exposure to metropolitan
retail. As a result, the REIT’s leverage metrics have shown a sharp deterioration, although imminent
asset sales and debt refinancing measures proposed are expected to stabilise the financial profile.

GCR has noted in its report the following positive measures that Accelerate is taking to improve its
financial profile:

Accelerate is proceeding with its intention to sell its European assets, which is expected to provide
support to the funding profile. Following the repayment of the related Euro debt, the REIT expects to
receive around R600 million in net proceeds. These will be used to repay domestic debt facilities, which
should see the overall LTV fall to around 41% and the SPV LTV to 42%. There are also around
R200 million in asset sales that are expected to transfer before 1H FY2022, with the proceeds to be
used to redeem debt, whilst the REIT has a larger sales pipeline of R759 million, whose proceeds will
be used to fund the future development of core investment properties and further reduce debt as
required.

Accelerate is also in the process of simplifying its debt structure and extending short term maturities.
Agreements in principal have been reached with its main bankers to extend facilities maturing before
September 2022. Additional facilities may also be received from existing funders, which will be used to
repay some of the smaller noteholders. Thus, while Accelerate has a weak liquidity profile as at FY2021,
facing R1.6bn in short term debt and negligible cash and unutilised facilities, under the assumption that
asset sales and debt refinancing materialises, GCR’s uses versus sources coverage for 12 months is
adequate at 1.3x.

Accelerate has extended its weighted average lease maturity profile to 6.1 years at FY2021, with the
strong baseline of income over the medium to long-term providing Accelerate some leeway to manage
its funding obligations, even amidst shorter-term performance weaknesses.



Fourways
25 August 2021

Debt Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)

Date: 25-08-2021 05:00:00
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