Property Flash


Mall of Africa has come through the worst of the pandemic and even more popular with shoppers than it was before the health crisis. The asset which is located in Waterfall, Midrand and is majority-owned by JSE-listed real estate investment trust (Reit) Attacq, was under extreme pressure during the hard lockdown in 2020 and other restrictions across 2021.

Only essential retailers could trade at first as the country responded to Covid-19. But half way into 2022, Mall of Africa has made a comeback, CFO Raj Nana explains.

“Just over two years ago, the world was upended by the Covid-19 pandemic, an unprecedented global health crisis. Earlier this year, further geo-political upheaval in Europe through the Russian invasion of Ukraine has either directly or indirectly affected South Africans. The global effects of these shocks cannot be understated and require a heightened level of resilience and agility from businesses, their boards and financial and operational teams alike,” says Nana.

He said the property sector was significantly affected by the various national lockdowns during the first 18 months of the pandemic. Bear in mind that around 50% of Attacq’s portfolio consists of retail with the balance comprising office and light industrial logistics.

During the 18 months Attacq assessed each client’s situation on a case-by-case basis and provided R187m in total Covid-19 related relief. “Since then, our retail valuations have stabilised and the most recent turnover performances show a marked improvement, exceeding pre-pandemic performances,” says Nana.

Attacq also disposed of R2.8bn of assets and the fund’s loan-to-value (LTV) was reduced from 46.6% to 38.0%. Nana says investors are now seeking reliable income again.

“Much of the lease deal making during the pandemic was short term, with a view of not locking in low pandemic-level rentals, but to rather be able to renegotiate these once the market had normalised,” says Nana.

This is now bearing fruit with retail trading densities up 12.1% with Mall of Africa exceeding 18% year on year and most retailers are seeing improved performances of their own.

All of Attacq’s retail assets are more than 96% occupied and the Waterfall Precinct has recently transferred more than 235 residential units in its premium Ellipse sectional title development. The Waterfall node currently has more than 34,000m² of developments under construction.

“Balance sheet management is ongoing and capital allocation is critically important, especially so in our stagflationary that is high inflation, low economic growth environment that we are currently experiencing. Our Waterfall City development pipeline continues to attract high quality multi-national clients and managing these development costs is of paramount importance,” says Nana.

SA’s interest rate hiking cycle is also well underway and the policy of hedging at least 70% of Attacq’s interest-bearing debt will assist in managing the interest rate risk.

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