March 12 2024
Attacq Limited (Attacq), the JSE-listed real estate investment trust (Reit) and strategic development partner in Waterfall City, on Tuesday released its interim financial results for the six months to end-December 2023, and reported a 2.8% increase in distributable income growth per share to 36.9c (Dec 2022: 35.9c) and an interim dividend of 30.0c per share, equating to a payout ratio of 81.1%.
The implementation of a landmark R2.7bn Waterfall City transaction in October 2023, with the Government Employees Pension Fund (GEPF) acquiring 30% of Attacq Waterfall Investment Company (AWIC), resulted in Attacq’s gearing decreasing significantly to 25.3% from 37.3%. It introduced a long-term strategic shareholder to AWIC and made substantial capital available for the continued development roll-out of Waterfall City.
One Tuesday Attacq announced the disposal of its remaining stake in MAS Real Estate PLC (MAS) for about R773m, a decision taken in accordance with Attacq’s capital allocation framework over its assets of which it has significant influence over.
“The purchaser is PK Investments Limited, a wholly-owned subsidiary of PKM Developments Limited,” it added. PKM is led by Martin Slabbert, MAS’ former CEO. MAS owns and manages malls, offices and residential properties in mostly Romania but also Poland and Bulgaria. Some of its assets were developed by PKM Developments.
Jackie van Niekerk, Attacq CEO, said: “This has been an excellent half year for Attacq, closing out key strategic transactions to ensure a sustainable capital structure. Our diverse precinct strategy continues to be well executed, with high occupancy and collection rates respectively of 93.7% and 99.7% emblematic of the high demand for our quality retail and logistics spaces.”
“Our flagship residential development Ellipse continues to attract investor interest with excellent sales recorded during the period. Furthermore, our well-located office assets are home to numerous global blue-chip companies, including iconic brands such as DP World, Eppendorf, Dell, Estee Lauder, Pfizer, Ericsson, Dimension Data and Accenture,” she said.
The group reported rental income growth of 9.6% to R1.3bn (Dec 2022: 4.0% to R1.2bn). Finance costs reduced by 4.1% when compared with the prior period while net operating income growth from property operations grew 6.4%.
“Our strong balance sheet was bolstered with the proceeds from the Waterfall City transaction with the GEPF of R2.7bn which was used to reduce interest-bearing debt to R5.9 billion (Jun 2023: R8.4 billion), resulting in an improvement in the interest cover ratio to 1.93 times,” Raj Nana, Attacq CFO, said.
The effect of this transaction was included for the final two months of the six-month reporting period and would have a larger impact on the full year results ending 30 June 2024, when it will be included for eight of the 12 months. For the full year, Attacq revised its distributable income per share (DIPS) growth guidance upward to between 10.0% and 12.5%. This also considered the disposal of the group’s shares in MAS Real Estate which will be invested in income generating activities within the group.
Van Niekerk said South Africa faces several headwinds, including energy and water disruptions and shortages, low business confidence, political uncertainty and persistently high inflation and interest rates, all of which are likely to constrain economic growth and, as a consequence, the real estate market in general.
Attacq’s strategy would remain resilient in challenging conditions and the successful conclusion and implementation of the GEPF transaction strengthened the group’s capital structure which is assisted in mitigating the impact of the headwinds referred to above.
The portfolio was expected to continue to generate income growth and, given the current capital structure, prudent interest rate hedging, available and liquidity, and the MAS disposal, the group’s full year DIPS guidance was revised upwards to between 10.0% and 12.5% growth with a pay-out ratio of 80.0%.
Attacq has a market capitalisation of R7.3bn. Its share price is up 8.46% year-to-date.
247@propertyflash.co.za
