Fourways Mall Managers Secure Call Option for 15% Equity

• Fourways Mall's asset and property managers, Flanagan & Gerard and Luvon, have been granted a call option to acquire up to a 15% equity stake in the mall.
• This new agreement, part of a complex management services deal, was facilitated by Azrapart's business rescue, allowing direct engagement with practitioners.
• The managers achieved a significant turnaround, reducing vacancies from 18.8% to 6.6% and increasing tenant turnover by 61% between February 2024 and August 2026.
• The deal includes an 'upside participation fee' and performance hurdles, compensating managers for growing collections above a base level, with options for payment in shares or cash.
• Shareholder approval is required for the appointment of the managers under this new arrangement.

The impressive turnaround at Fourways Mall, spearheaded by its asset and property managers, has culminated in a novel agreement granting them a significant equity option.

The asset and property managers of Fourways Mall, Flanagan & Gerard (F&G) and Luvon, the latter owned by Moolman Group family interests, have secured a significant call option. This agreement allows them to acquire an equity stake of up to 15% in the prominent retail property. The option is a key component of a comprehensive new property, development, and asset management services agreement established with the mall's co-owners, JSE-listed Accelerate and Azrapart, an entity under the control of Michael Georgiou, which is currently in business rescue.

This complex arrangement follows an earlier management agreement from February 2024 that lapsed later that year due to unfulfilled conditions. Despite the lapse, both F&G and Luvon continued to provide their services on site. The subsequent entry of Azrapart into business rescue in June 2025 unexpectedly streamlined the approval process for the new terms, as direct engagement with the business rescue practitioners became possible. Michael Georgiou, who had controlled Azrapart, ceased to be a director of Accelerate in October 2025. The finalization of this South Africa property turnaround agreement now requires a vote for approval from shareholders.

The decision to grant the Fourways Mall managers a call option is directly linked to their exceptional performance in revitalizing the massive 179,973 square meter retail space. Since their initial appointment in February 2024, F&G and Luvon have orchestrated a stunning turnaround. Vacancy rates, which stood at 18.8% in February 2024, plummeted to just 6.6% by August 2026, transforming previously unoccupied wings into vibrant retail areas.

Financial metrics also reflect this success: tenant turnover surged by 61%, increasing from R226.3 million to R365.2 million over the same period. Trading densities saw a substantial rise from R1,816 per square meter to R2,711 per square meter. This resurgence is attributed to improvements across all visitor metrics, including footfall (monitored by counters installed in September 2024), vehicle count, and dwell time. Further cementing the turnaround, the mall recently celebrated the opening of 'The View,' a R100 million luxury lifestyle food offering, which introduces a much-needed convenience, food, and restaurant element absent since the mall's 2019 redevelopment and expansion. This new wing, featuring an iconic three-storey atrium, hosts tenants such as The Pantry (by Marble), tashas, a relocated Fournos Bakery, Nossa Casa, Clay Café, and George’s Grill. Additionally, co-working space Workshop 17 is set to open its fifth Johannesburg location in this section of the mall, situated at the corner of Cedar and Witkoppen roads.

Accelerate and the business rescue practitioners for Azrapart, Piers Marsden and Lance Schapiro, have explicitly stated their agreement on the critical importance of formalizing the managers' appointment and retaining their services. This is seen as essential for unlocking the mall's full potential, including its redevelopment prospects, and for generating additional value for shareholders. The call option is designed to allow Flanagan & Gerard and Luvon to participate directly in the future upside of the property, aligning their interests with those of the owners.

Beyond the equity option, the agreement includes an 'upside participation fee' to protect the managers should their services be terminated before the completion of their five-year contract. This Fourways Mall asset management incentive is tied to a clear performance hurdle: normalized net monthly collections, effectively rent, must not fall below a minimum level of R15.6 million for the first year, with subsequent annual increases pegged at CPI plus 1%. The managers will be compensated for driving collections above the current baseline, based on an agreed formula that excludes project funding and capital expenditure costs. Specific upside protection fees are set at R130 million for year three, R140 million for year four, and R150 million for year five. Significantly, F&G and Luvon retain the flexibility to elect whether to receive these fees as shares, thereby increasing their Flanagan & Gerard Luvon equity stake in the mall, or as cash, ensuring all parties are incentivized towards shared success.

Lawyers advising on corporate restructuring or property deals should note how business rescue practitioners can facilitate novel agreements, such as management equity options, to incentivize turnaround and unlock value in distressed assets like Fourways Mall, requiring careful contract drafting and shareholder approval.

Source: Original reporting via market sources.