Award‐winning property Group reports resilient performance in terms of increased distributable income, attracting blue-chip clients and forging key investment partnerships
- Dividend declared of 29.0 cents per share for the interim period, equating to a pay-out ratio of 80.8%.
- Distributable income per share increased by 27.3% to 35.9 cents
- Interest cover ratio improved to 1.72 times from 1.50 times
- Occupancy and collection rates remain high at 92.0% and 101.3%, respectively
- Weighted average annual trading density growth of 14.7%
- Development activity at Waterfall City totalling 53 697m2 of gross lettable area, with a total cost at completion of R915.4 million
- Strategic investment of R2.8 billion in Waterfall City by Government Employees Pension Fund (GEPF) proposed
Tuesday, 14 March 2023. Attacq Limited (“Attacq”), the JSE-listed REIT developing Waterfall City, today announced its financial results for the six months ended 31 December 2022. The Group’s performance included growth against all key metrics with the key highlights being the declaration of 29.0 cents per share for the interim period and the increase of distributable income per share of 27.3%.
The performance was particularly resilient against the backdrop of South Africa’s low growth environment, characterised by record unemployment, poor business confidence levels, and a generally weakening economy exacerbated by the country’s energy crisis. Attacq’s burgeoning mixed-use Waterfall precinct continues to see development activity, which, in the period under review, totalled 53 697m2 of gross lettable area, with a total cost at completion of R915.4 million. Another significant milestone was the recently announced transaction, in terms of which a R2.8 billion strategic investment into Waterfall City by the GEPF has been proposed.
Attacq CEO Jackie van Niekerk says; “Our sustained growth and success can be attributed to our continued dedication to our strategy which has equipped us to address the rapid changing environment in which we operate Our results indicate that we are on track in delivering on our purposeful strategy focused on creating smart, safe, and sustainable community spaces, while enhancing the experience of our clients and shoppers within our office, retail and industrial hubs.”
In this period, Attacq demonstrated the underlying quality of its diverse portfolio which resulted in an increase in the utilisation of our collaboration hubs as more businesses returned to the office. The Group’s retail-experience hubs also performed well with the weighted average trading densities of the portfolio growing by 14.7%. In particular, the Mall of Africa’s trading density was notable at 22.8%.
Furthermore, Attacq has embarked on initiatives to curb the continuous use of generators as a result of increased load-shedding. The company’s response has been to reduce energy consumption and reliance on generators through a number of initiatives, including retrofitting lights, installing generator management systems to shut down generators after hours for specific buildings and adding ±2.3MWp rooftop photovoltaic (PV) systems, with a further ±4.7MWp rooftop PV systems in planning as well as battery backups for buildings and precincts.
An attractive destination driving strategic investment
Attacq recently announced a landmark R2.8 billion transaction with GEPF which is set to further de-leverage its balance sheet, optimise the Group’s capital structure and fund the continued development of Waterfall City. Once implemented, Attacq will see its gearing reduce significantly providing the balance sheet capacity to develop out Waterfall City. Attacq’s capital structure will also be optimised resulting in a reduced cost of capital thereby enhancing returns for Attacq’s shareholders.
Successful debt management and continued focus on capital allocation
Prior to interim-period end, the Group successfully refinanced R1.1 billion of existing debt at a weighted average reduction in margin of 64bps.
Attacq CFO Raj Nana adds “For the interim period, amidst tough economic conditions, through our focused approach, we delivered a 27.3% increase in DIPS, with a strong performance from our key strategic node, Waterfall City, which grew by 49.9%. The balance sheet remains healthy with a gearing ratio of 38.0% and available liquidity of R1.4 billion. We are also pleased to have declared a dividend of 29.0cps.”
A quality and resilient portfolio with an encouraging outlook
Attacq’s investment case remains compelling, offering access to a unique portfolio that has proven its resilience in withstanding significant headwinds, including increased energy and water disruptions and shortages, and rising inflation and interest rates. Looking ahead, these headwinds are likely to restrict economic growth and, as a consequence, impact the real estate market in general.
The landmark GEPF transaction will significantly strengthen the Group’s capital structure and assist in mitigating the impact of the weakened macroeconomic backdrop.
The portfolio is expected to continue to generate income growth and given the current capital structure, prudent interest rate hedging and available funding and liquidity, the Group’s full year distributable income per share guidance of between 8.0% and 10.0% growth and a pay-out ratio of 80.0% remains unchanged.