Fourways Mall co-owner may be forced to write off R800m

For the first time since announcing a “settlement agreement” with various parties in November 2024, Accelerate Property Fund – the 50% co-owner of Fourways Mall – has said that it may be forced to write off the R800 million it is owed by those entities, most of which are related to Nic Georgiou (whose vehicle Azrapart owns the other 50% of the mall).

The parties are a web of interrelated entities, including Azrapart (the developer of Fourways Mall), Accelerate Property Management Company, Fourways Mall Managing Agent, Fourways Precinct (the former manager of Fourways Mall), “the trustees for the time being of the Michael Family Trust” and Michael Nicolas (Nic) Georgiou.

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The November 2024 agreement lapsed due to various suspensive conditions not being fulfilled within the requisite timeframe.

A few months after announcing the original “settlement”, Accelerate told shareholders that “the suspensive conditions in the Settlement Agreement were not fulfilled on time and as a result the settlement agreement is of no force and effect”.

“In this regard, the Company will engage with the various parties to the Settlement Agreement in order to conclude a new agreement on the same or substantially the same terms as the Settlement Agreement (‘New Agreement’), which would include an extension of the time period for the fulfilment of the suspensive conditions, and shareholders will be notified of further developments in this regard in due course.”

On Friday, Accelerate said that “although both parties have indicated their willingness to sign the New Agreement, the New Agreement has not yet been concluded as of today” … and that “negotiations with the Related Parties are ongoing”.

Two possible scenarios

It shared two different scenarios with shareholders.

One where the agreement is signed (on practically the same terms as the original settlement) and matters are settled, or another if the negotiations are unsuccessful.

Under the latter scenario, Accelerate warns that when it comes to the recoverable amounts “totalling approximately R800 million” it “may likely determine that there is no reasonable prospect of recovering” these receivables and it will fully impair the amount in its next set of financial results.

The settlement is arguably as complicated as these “negotiations”.

‘Composite’ settlement agreement

In July 2024, it announced “a composite settlement agreement of the respective claims of Accelerate against Mr Georgiou and the entities under the control of Mr Georgiou and the claims by Mr Georgiou and the entities under the control of Mr Georgiou against Accelerate”.

Importantly, this would see no cash outflow from Accelerate.

Azrapart owed a total of R796 million to Accelerate (mostly from Fourways Precinct). To settle this, Accelerate proposed paying R300 million to Azrapart under a “rebuilt claim” from the redevelopment of the mall plus an additional R71 million to take into account the time value of money. This would then draw a line under this dispute.

Accelerate would then also ‘pay’ Azrapart (/Fourways Precinct) R74 million for 50% of the remaining undeveloped bulk (that is 50% of 18 647m²).

In addition, it would ‘pay’ R241 million for a 50% economic interest in 2 929 parking bays constructed by Azrapart. It owned 50% upon completion of the new Fourways Mall, but Azrapart retained 100% of the economic interest in the bays.

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It also terminated the head lease entered into between Accelerate and Azrapart.

Coincidentally, the amounts the two parties would pay each other matched perfectly.

Mall under pressure

Fourways Mall remains under pressure although efforts by the new managing agent Flanagan & Gerard have been bearing fruit.

Vacancies are at their lowest since the redevelopment and Planet Fitness will be taking up another chunk of space shortly.

Listen: Fourways Mall’s big fix plans

What is strange is that Flanagan & Gerard and Luvon (part of the Moolman Group) were announced as joint property and asset managers in August 2024, but in November that same year Accelerate said the conditions in that agreement were also not fulfilled on time.

Both parties, however, remain on site acting as property and asset managers of the mall.

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