- – Distributable earnings per share increased by 17.0% to 94.4 cents
- – Full-year dividend per share (DPS) of 81.5 cents, increased by 10.1%, exceeding guidance
- – Trading density growth in retail portfolio of 6.8%, with Mall of Africa increasing by 13.1%
- – Seven buildings completed in Waterfall with a further nine buildings under construction
- – Reduction in Rest of Africa exposure with the disposal of Achimota Retail Centre; additional disposal concluded post year-end
- – Positive prospects for future distributions
Tuesday, 10 September 2019: Attacq Limited (“Attacq”), a South African-based REIT today announced a full-year dividend per share (DPS) of 81.5 cents for the year ended 30 June 2019. This is an annual increase of 10.1% and exceeds the previously communicated market guidance.
Attacq’s distributable earnings per share (DEPS) increased by 17.1% to R664.1 million (restated 2018: R567.2 million). Included in the distributable earnings, is R89.5 million (2018: R46.7 million) of cash interest received from shareholder loans advanced to AttAfrica Limited. Adjusting for this non-recurring item, distributable earnings grew by 10.4%. Attacq’s performance continues to be underpinned by its quality South African portfolio, Developments at Waterfall and its 22.8% shareholding in MAS Real Estate Inc.
Melt Hamman, CEO of Attacq, commented, “By combining living, working and lifestyle spaces, we have achieved a winning formula at Waterfall, the success of which is evident in the 13.1% increase in trading densities for the Mall of Africa as well as the exceptional interest from buyers for our first high-rise residential development, Ellipse Waterfall. We are pleased with the results achieved for the year ended 30 June 2019 and are excited about the future of Waterfall.”
Attacq’s South African operational portfolio consists of retail, office and mixed-use, light industrial and hotel properties. During the year ended 30 June 2019, the distributable earnings from the South African portfolio increased by 9.1% to 59.0cps (2018: 54.1cps). The value of the existing South African portfolio is R20.5 billion (2018: R20.9 billion), comprising 75.6% (2018: 75.2%) of total gross assets.
The portfolio’s weighted average lease expiry is 6.5 years as at 30 June 2019 (2018: 7.0 years). The average growth in trading densities in the retail portfolio for the year ended 30 June 2019 was 6.8% (2018: 5.1%), while the Mall of Africa’s trading density growth was 13.1% (2018: 10.5%) and its rent to sales ratio improved to 9.1% (2018: 9.6%).
Mall of Africa’s trading density is exceptional for a super-regional that has only been operating for three years. The shopping centre is providing a holistic retail experience that supports tenant and consumers ambitions. It has managed to become a leading lifestyle, entertainment and shopping destination. Key to Mall of Africa’s success has been its central location in the heart of Gauteng, and the growing number of corporates that are set to move into Waterfall City is likely to contribute to the Mall performing even better with time.
According to Attacq COO, Jackie van Niekerk, “The development of the Waterfall City and Logistics Hub continues to generate interest from people and businesses seeking a central, easily accessible location that offers an attractive value proposition.”
During FY2019, developments under construction increased to R929.5 million (2018: R527.6 million) which includes a head office for Deloitte and a four-star Courtyard Hotel amongst others.
Van Niekerk added, “The growing trend of corporate consolidation is impacting the property development space and creating captive audiences for retail and residential spaces. This virtuous relationship, supported by well-managed and functional infrastructure, is what positions Waterfall as a prominent business, logistics and residential precinct.” Other tenants secured during the year at Waterfall include Zimmer Biomet, PSG Wealth, Superga and Accenture.
Ellipse Waterfall, the first luxury high-rise residential development has achieved excellent success and is set to encompass the Live aspect of the City’s ‘Live. Work. Play’ motto. To date, the development has sold 80% of the 272 apartments, and this success is attributed to the fact that investors know that the precinct has potential to generate capital growth and long-term wealth creation. Another benefit of this development is the fact that Waterfall City is entirely and adeptly managed by Attacq.
Waterfall’s location is unparalleled, as it is not only situated on the business corridor between Johannesburg and Pretoria, it is also supported by two Gautrain bus routes, private schools, a private hospital and features world-class lifestyle, retail and leisure amenities on its doorstep. For instance, earlier this year, Waterfall City unveiled the Waterfall Market; it is also set to host the Johannesburg International Flower Show from 30th October to 3rd November.
Complementing the performance of the South African portfolio, was the contribution to distributable earnings of 26.9 cents per share generated by the investment in MAS. MAS achieved a 59.6% increase in net rental income to EUR51.6 million and a 41.9% increase in DEPS from 6.35 euro cps to 9.01 euro cps, driven by acquisitions of investment property and its real estate equity securities portfolio.
For the year ended 30 June 2019, AttAfrica had successfully disposed of its interest in Achimota Retail Centre in Ghana, reducing the value of Attacq’s Rest of Africa retail investments as a percentage of total assets to 3.0%. Following the Manda Hill Shopping Centre disposal post year-end, this reduced to below 2.0%, excluding cash held by an Attacq subsidiary. CFO, Raj Nana said, “We are pleased with our progress in reducing exposure to the Rest of Africa retail investments and will continue to focus on recycling capital from the disposal of assets.”
Barring unforeseen circumstances and provided it can achieve forecasted rental income based on contractual terms, deliver on the expected Waterfall development roll-out and MAS realises its three-year dividend target, Attacq is expecting to deliver DPS growth of between 8% and 10% for the 2020 financial year. “Operating conditions will undoubtedly remain challenging, however, on-going expansion of the precinct to add, amongst others, an A-grade office park and a new hotel will usher more footfall and investment interest in Waterfall over the next few years, yielding sustainable returns”, concluded CEO Melt Hamman.