The aReit board is considering delisting from the Johannesburg Stock Exchange (JSE) amid challenges to clear a backlog in financial reporting.
The board announced that it would only make a decision on a potential delisting once the company’s financial reporting had been brought up to date, while it continues to work towards restoring compliance with the JSE Listing Requirements.
The company holds a property portfolio in Cape Town comprising of three primary leasehold buildings including two four-star hotels, Cresta Grance Hotel and Fountains Hotel, and accommodation asset Lady Hamilton.
“This consideration is partly due to the technical IFRS® accounting treatment and associated costs, versus what should be a simple business model of four invoices per month in terms of the four lease agreements plus variable income, less listing expenses.
“A further consideration is the loss of REIT status due to the late financial statements, which has tax implications for the company,” the company said.
Outstanding financial statements
The company remains behind with several reporting periods and must publish audited annual financial statements for the years ended December 2023, December 2024 and December 2025 before it can regain compliance.
It must also distribute the corresponding annual reports and publish interim results for the six months ended June 2024, June 2025, and June 2026. According to the aReit, annual financial statements for 2023 and 2024 had been prepared, but remained subject to any audit adjustments arising from the 2023 audit and the former auditor’s consideration of whether to reappoint it. Preparation of the company’s financial information for 2025 was still underway.
Search for auditors
The company continues to engage with prospective audit firms in an effort to appoint an auditor capable of expediting the outstanding audits.
However, it said appointing a new auditor had proved difficult, with larger audit firms concerned about the risks associated with the company’s ongoing suspension, late financial statements, a JSE Pro-active Monitoring Review and the accounting treatment of its leasehold properties.
“The JSE had recently considered the removal of the listing but then elected to try to assist the Company through engaging with IRBA on the review of mid-sized firms.
“Part of the difficulty in appointing a new auditor is the larger firms’ perception of risk due to the ongoing suspension and late financial statements as well as the JSE Pro-active Monitoring Review and accounting treatment surrounding the leasehold properties, which indicated an upward valuation and restatement of the 31 December 2022 results versus independent property valuations, which indicated an impairment of the properties, as noted in the initial trading statement published on 8 April 2025,” the company said.
Operations on track despite reporting hurdles
Despite the reporting problems, aReit said its operations continued and the Cresta Hotel was performing well, with the company earning variable income from the property.
The lease at the Lady Hamilton property has also changed from medical suites to student accommodation, mainly serving international students. The company said the property’s location was well suited to this market.
However, aReit is facing a dispute with a significant tenant over the maintenance of air-conditioning units.
The company said normal maintenance of the units was the tenant’s responsibility under the lease, while the tenant was seeking replacement of the air conditioners, which were new when the lease was signed. The tenant has withheld lease payments as a result of the dispute.
The company said it was obtaining external legal advice and assessing the potential impact of the matter on its financial reporting. At this stage, management does not expect the dispute to have a negative financial impact, citing clear lease conditions and a parent guarantee.
- aReit's board is considering delisting from the Johannesburg Stock Exchange due to delays in financial reporting and compliance challenges.
- The company must publish audited annual financial statements for 2023, 2024, and 2025, plus interim results for June 2024, 2025, and 2026, to regain compliance.
- Difficulty in appointing a new auditor arises from risks related to the company’s suspension, late reports, JSE scrutiny, and complex accounting of leasehold properties.
- Despite reporting issues, aReit's operations, including the Cresta Hotel and conversion of Lady Hamilton property to student accommodation, are performing well.
- aReit faces a tenant dispute over air-conditioning maintenance and withheld lease payments, but management expects no significant financial impact due to clear lease terms and guarantees.
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“A further consideration is the loss of REIT status due to the late financial statements, which has tax implications for the company,” the company said.
It must also distribute the corresponding annual reports and publish interim results for the six months ended June 2024, June 2025, and June 2026.
However, it said appointing a new auditor had proved difficult, with larger audit firms concerned about the risks associated with the company’s ongoing suspension, late financial statements, a JSE Pro-active
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“Part of the difficulty in appointing a new auditor is the larger firms’ perception of risk due to the ongoing suspension and late financial statements as well as the JSE Pro-active
Despite the reporting problems, aReit said its operations continued and the Cresta Hotel was performing well, with the company earning variable income from the property.
However, aReit is facing a dispute with a significant tenant over the maintenance of air-conditioning units.
