CEO UPDATE - BEYOND THE HORIZON: WHAT’S NEXT FOR ACCRETIV...
What’s Next for Accretiv...
Consistent with our outlook set in early 2023, the U.S. commercial real estate market is entering a new upward cycle at last. While the implementation of global tariffs temporarily delayed this trajectory and introduced the risk of higher inflation, the Federal Reserve's decision to begin lowering interest rates, starting with an initial 25 basis point (0.25%) cut on Wednesday, is a most welcome development.
For our portfolio, this shift is especially significant. Over the past year, the cost of holding our buildings has risen sharply as maturing fixed-term debt was refinanced at rates more than double their original levels. The reduction in borrowing costs will immediately enhance our cash flow and positively influence other fundamentals. Transaction activity should accelerate, while the positive spread between income generated by our properties and the cost of debt will push capitalization rates lower, thereby increasing the value of our portfolio.
Financial Reporting & Upcoming AGM
Following a demanding audit process, we are pleased to confirm that we now have draft audited financial statements for the group, covering 83 companies. While the process took considerably longer than expected, we are now preparing to present these results to investors. A webinar will be held on Thursday, the 25th, where we will share the final draft numbers and address investor questions. This will be followed by our Annual General Meeting in late October.
The audited results from December 2024 highlight the scale and strength of our portfolio:
- Dividend declared: USD 4.5 million group, and 3.8 million at the company level.
- Group assets: USD 232.2 million.
- Total Net Asset Value: USD 72 million.
- Share Price: USD 0.90.
- Revenue: USD 22 million.
- Closing cash: USD 5.2 million.
Liquidity Event
We are pleased to confirm the launch of the Liquidity Event, through which the company will repurchase 2,300,000 shares for $0.85 per share, as independently determined by the auditors in accordance with our Memorandum and Articles of Association and the listing requirements. While this valuation is lower than we had anticipated, it reflects a conservative assessment of current market conditions. Real estate values naturally ebb and flow with market cycles, and considering the clear intent of the Federal Reserve to continue cutting interest rates, now is not the time to exit long-term positions. These buy-backs are subject to capital being available from the timing of the refinance transactions and requirements of the portfolio over the remainder of the year.
Expansion into Industrial Real Estate
As highlighted in our last update, we are moving forward with the creation of a new portfolio focused on U.S. industrial assets, specifically small-bay warehouses. I am pleased to report that we are close to acquiring our first property in this sector. The Accretiv Hybrid Portfolio will comprise 8–10 small-bay buildings, a niche segment where demand is outstripping supply in many submarkets. Unlike the medical sector, this space offers unique opportunities to acquire well-priced assets that can deliver attractive returns. We are confident the timing is right and are excited to begin building this portfolio.
Looking Ahead
As we enter the final quarter of the year, we remain optimistic about the opportunities ahead. Lower interest rates, stronger portfolio fundamentals, and our new industrial real estate initiative position us well for long-term value creation.
We look forward to engaging with you during the upcoming webinars and AGM. Details on how to participate in the Liquidity Event or the Accretiv Hybrid Portfolio.
