ATTACQ CONTINUES TO DELIVER ON STRATEGY AND REMAINS WELL-POSITIONED FOR GROWTH
- – Distributable income from South African operations increased by 22.5%
- – R2.8 billion of capital recycling announced to date
- – Liquidity improved to R1.7 billion at year-end
- – Group gearing decreased to 43.3%
- – South African real estate portfolio rental collection rate of 101.5%
- – South African occupancy levels improved to 95.2%
- – Five buildings completed in Waterfall with a further five under construction
- – Total of 47 930 m² of new developments underway in Waterfall City
Tuesday, 14 September 2021. Attacq Limited (“Attacq”), the JSE-listed REIT developing premium precincts such as Waterfall City, concluded its financial year end, 30 June 2021, with a solid financial and operational performance. The company’s sound results were supported by a well-considered capital structure improvement programme and a strategy of informed disposals.
Attacq’s high-quality South African real estate portfolio consists of retail-experience hubs (retail), collaboration hubs (office and mixed-use), logistics hubs (light industrial), and hotels. Attacq’s recent disposals of the Deloitte head office, Massbuild distribution centre and the Amrod building, at close to their valuations, demonstrates the quality of its real estate portfolio. The proceeds of these capital recycling transactions, as well as it shares in MAS, totalled R2.8 billion to date and will be utilised in reducing interest-bearing debt and improve its capital structure.
Attacq CEO Jackie van Niekerk says, “It’s been another year of flux for the real estate sector in South Africa – and across the globe. The Covid-19 pandemic continues to impact businesses and people alike, bringing with it a need for flexibility, forward-thinking and the imperative to understand client and customer challenges more deeply than ever before. While Attacq has remained focused on delivering on the financial and operational strategy, and we are extremely gratified to see this flow through in company performance. It is our team’s ability to roll with the punches and adapt at pace that has helped us keep moving forward so steadily.”
While group distributable income reduced by 35.9% and no dividend has been declared for the 2021 financial year, the portfolio performed well against market expectations. Like-for-like rental income decreased by 0.5% (2020: decreased 4.8%); property expenses, excluding cost of sales of sectional-title units, decreased by 1.5% (2020: increased 2.6%) to R757.0 million (2020: R768.7 million); and net operating income on a like-for-like basis increased by 1.4% (2020: increased 4.2%). Furthermore, the completed portfolio maintained high collection rates and occupancy levels despite lockdown restrictions, and new high-quality clients were successfully secured for Waterfall City.
Attacq’s strong South African performance ensures it is well placed to weather an environment still being disrupted by the pandemic, technology innovations and shifting customer behaviours.
These innovations are something the company has been tracking closely for many years, using data to inform investment, product and innovation decisions as it seeks to leverage the intersect between technology and people. With lockdown accelerating the shift by shoppers from in-store transaction-focused behaviour to online shopping, Attacq’s ability to augment customer engagement through an increasingly experiential proposition has been key to its successful shopper, resident and tenant acquisition (and retention) strategies.
“The ability not just to embrace change, but to optimise for it is imperative for any business seeking sustainability in our dynamic environment. All over the world, consumer behaviour evolves as people demand more from their brands and their communities. The pandemic has seen a seismic shift in the need for connectedness in safe spaces – and Attacq has responded by creating retail-experience hubs. Here, we provide an optimised client mix – a space where people connect and benefit from on-demand services, collection points, and loyalty rewards,” adds van Niekerk.
The Mall of Africa completed its first five-year lease cycle at the end of April 2021 and management took the opportunity to optimise the tenant-mix by introducing 20 new brands, which included new-concept stores for HiFi Corporation and Clicks Baby, as well as Ted Baker, Hugo Red, and Nando’s, some of which were as a direct result of shopper requests.
Attacq’s well-articulated strategy encompassing foresight-focused developments that recognise and meets the needs of current and future residents and tenants is capturing the markets’ interest. This can be seen in the skilful weaving of commercial, residential, retail and lifestyle products to create a compelling, premium precinct proposition in Waterfall City.
In fact, following the success of the luxury residential development, Ellipse Waterfall, and both buyers’ and clients’ interest in a precinct offering smart, safe and sustainable community spaces in established nodes, Attacq has expanded the residential offering of Waterfall City by launching its latest residential development, The Mix. Sales achieved to date for The Mix surpassed expectations, despite being launched during Covid-19. Post year-end, Attacq welcomed their first apartment residents to the city, following the transfer of 196 Ellipse Waterfall units.
CFO, Raj Nana comments, “Our proactive financial strategy, including debt reduction initiatives, will continue to improve our gearing position – a key strategic focus over the past 18 months. Improved debt levels certainly aid our investment case and strengthen our capital position.”
Attacq’s strategy to get closer to clients with tailored offerings that address their needs today and into the future too. The company’s property and asset management teams proactively engage with individual clients across the entire portfolio to listen to, and understand their business needs. As clients adapt to hybrid working arrangements, the need for collaborative spaces is gaining prominence. Attacq is able to attract these clients due to its flexible solutions offerings in terms of space requirements and leases, with a focus on space optimisation, convenience, and space as a service.
A clear example of how this is working is in the fact that Waterfall City continues to attract quality clients, resulting in a total 38 087m² effective GLA of new developments underway since year end. This included Vantage’s new data centre (11 785m²) and Cotton On’s head office and distribution centre (20 786m²).
While partial lockdown restrictions have been eased, they continue to bring a level of uncertainty into the operating environment. In addition it is the unknowns around the vaccination roll out and the timing of the opening of the economy that prolong the need to proceed with prudence. Accordingly, the board has resolved not to provide guidance for the financial year ending 30 June 2022. Attacq is, however, seeing signs of improvement in the real estate sector and specifically in their business drivers.
Van Niekerk concludes, “Attacq’s approach of embracing and adapting to business disruption has built resilience into the portfolio and its prospects. We continue to seek enhanced prospects to strengthen our capital structure and create sustainable value for all – and we look forward to a new year of ambitious, exciting opportunities.”