- Accelerate's distribution per share for FY2023 will be significantly lower.
- The company cited an increase in the number of shares as the main reason.
- The board indicated that it is unlikely the company will declare any distribution.
Accelerate Property Fund Limited, one of South Africa's largest listed property investment and development companies, has issued a trading update warning that its distribution per share for the current financial year will be significantly lower than previously expected.
In the trading update, Accelerate said it now expects its distribution per share for the year ending 31 March 2023 to be more than 15% lower than the previous year's distribution. The company cited the 26.5% increase in the number of shares in issue due to capital raising activities as the main reason for the lower distribution per share.
More concerningly, Accelerate's board has now indicated that it is unlikely the company will declare any distribution at all for the full 2023 financial year. The board said this decision was necessary to strengthen Accelerate's financial position and ensure sufficient liquidity for capital expenditure on its core property assets.
The announcement indicates that Accelerate is facing challenges in growing its revenue and cash flow sufficiently to cover its distributions to shareholders. The company has relied on capital raising activities to fund distributions in the past, but this is not a sustainable strategy.
The outlook for Accelerate's distribution capacity will remain unclear until the company releases its full-year results for the period ended 31 March 2023. However, investors should be wary of the risks highlighted by this trading update and monitor Accelerate's progress in achieving a stable financial position that can support sustainable distributions going forward.
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