• Distributable income per share increased by 33.6% to 28.2 cents,
excluding trading profit on the sale of sectional title units of 9.35 cents,
• Net asset value per share increased by 6.8% to R16.83,
• Group gearing improved from 43.3% to 38.0%,
• COVID-19 rental discounts reduced by 84.3% to R8.5 million,
• Growth in weighted average trading density over 12 months of 8.7%,
• Developments under construction in Waterfall City of 59 395m2.
Tuesday, 22 Marc 2022. Attacq Limited, the JSE-listed REIT known for the success of its Waterfall City precinct, today announced its interim results for the six months ended 31 December 2021. Reflecting the company’s strong financial position, this solid outlook highlights the benefit of Attacq’s strategic focus on developing premium precincts and engaging experiential retail destinations.
Mall of Africa, Waterfall City CEO of Attacq, Jackie van Niekerk says, “Attacq has remained focused on delivering on the financial and operational strategy we embedded last year, and we are extremely gratified to see this flow through in company performance. Our results are also a testament to the team’s proactive and agile approach in meeting market challenges and adapting our strategic response accordingly. Their ability not just to embrace change, but to optimise for it, has been key to business sustainability. In terms of the operating environment, we are cautiously optimistic that recent green shoots are heralding a start to economic recovery, an encouraging sign for us and our stakeholders.”
The group delivered a 34.1% increase in distributable income per share of 28.2 cents, excluding profit earned from the sale of residential units of 9.35 cents. The growth was mainly driven by the dividend received from its investment in MAS of R46.1 million, proving the decision to hold the remaining 6.5% prudent as it delivered capital growth and dividend income for the reporting period.
As part of Attacq’s strategy to reduce debt and strengthen the balance sheet, the group successfully managed to lower its gearing from 46.3% at 31 December 2020 to 38%. The improvement in gearing is attributable to the total interest-bearing borrowings decline of 15.4% to R8.6 billion, compared to R10.2 billion during the comparative period. Additionally, the group maintained a strong liquidity position of R1.8 billion as proceeds from disposals executed during the period under review were deployed to pay down and reduce debt. Attacq’s focus on creating smart, safe and sustainable community spaces that provide unforgettable experiences in its precincts is a key differentiator. This was evidenced by the group’s retail-experience hubs performing relatively well, reporting a 96.2% occupancy rate.
In addition, year-on-year weighted average trading density grew by 8.7%, with the award- winning Mall of Africa increasing by 14.9%, Garden Route Mall increasing by 10.0% and Lynnwood Bridge – Retail increasing by 9.0%. All assets indicate the increased level of sales as the group wades through to return to 2019 levels.
Collaboration hubs – focusing on space optimisation, convenience and space-as-a-service – are a concept that was in the making pre Covid-19. However, the global pandemic accelerated their relevance as clients sought flexible solutions to both space requirements and leases. This innovation saw Attacq improve office utilisation rates towards the end of the previous calendar year, especially as businesses started implementing return-to-work policies and hybrid working models.
Attacq recently announced its partnership with IWG (Regus and SPACES in South Africa), to collectively expand their service offerings in an increasingly agile property industry, responding to the varying office needs and the emerging ‘Hybrid’ shift. Starting with Lynnwood Bridge Precinct and then the Waterfall City precinct, Attacq is broadening its footprint, offering flex-space options which will be managed by IWG.
The group’s logistics hubs continue to demonstrate their value in the current, dynamic environment, reporting 100% occupancy during the six months ended 31 December 2021. Offering clients a secure urban and fully integrated office and warehouse space with all amenities under one roof underpins Attacq management’s capabilities to embrace business disruptions, identify value-creating opportunities and optimise accordingly.
“Trends such as online shopping, work-from-home and hybrid working models have really pushed us as a team to think differently about how we interact within the real estate sector, particularly in our developments and how we service clients in these safe, connected spaces. Our diversified client base and extensive portfolio of different asset classes in multiple geographies, as well as our streamlined approach to asset, property and development management, have provided us with a strong foundation of the building blocks for continued business resilience,” adds van Niekerk.
Attacq’s rental income was in line with the prior period at R1.1 billion, with a marginal decline of 0.7% on a like-for-like basis. Property expenses, excluding the cost of sales of sectional-title units, increased by 14.8% to R433.5 million compared to R377.8 million at 31 December 2020. This was mainly driven by bad debt write-offs, provision for bad debts and municipal charges. At the same time, net operating income on a like-for-like basis decreased by 4.6% (31 December 2020: increased by 3.4%).
Furthermore, total assets decreased by 4.5% to R21.6 billion, and total liabilities decreased by 15.4% to R9.7 billion compared to R11.5 billion at 30 June 2021. The respective changes are attributable to Attacq’s concerted efforts to dispose of non-core assets.
Commenting on the financial performance, CFO of Attacq, Raj Nana said, “The last two years were about optimising our capital structure through debt reduction initiatives, whilst ensuring our existing Waterfall City and the rest of South Africa portfolio continue to perform well. Despite challenging trading conditions, Attacq has delivered a good set of results. Moreover, the progress made on executing the strategy in terms of the disposals is satisfactory, and yielded in reduced interest- bearing debt and an improved net asset value, further showcasing Attacq’s strong financial position.”
The groups’ focus on developing Waterfall City is anchored in developing a smart, secure, and sustainable city that attracts and retains residents, retail tenants and commercial clients. During the period, Corporate Campus Building 6 was completed with a total GLA of 3 970m2. The centrally located live-work-play precinct has another five developments under construction. These developments include 185 units in the luxury Ellipse Waterfall Cassini Tower, Nexus Waterfall Building 1, Waterfall Corporate Campus Building 7, Cotton On head office and distribution centres, and the first phase of the Vantage Data Centre. Having launched two residential developments, Ellipse and The Mix Waterfall, Attacq continues to ensure that Waterfall City offers a vibrant, engaging urban experience, even during the night time and weekends.
In light of the ongoing global economic uncertainty, the Board has elected to continue taking a conservative approach to capital management. Attacq believes that this will contribute to ensuring long-term sustainability. As such, the Board has resolved not to declare an interim dividend.
“As a business, we are primed to continue to unlock unique opportunities through our embedded culture of innovation and customer-centricity. There is no doubt that the short to medium term will continue to be challenging, however I am confident that the strengths and capabilities within our portfolio and our people, position us well to take on any task that lies ahead. We will remain focused on delivering to our strategic imperatives whilst ensuring we create sustainable value for all our stakeholders,”concludes van Niekerk.