Attacq posts sterling maiden half-year figures

Newly JSE-listed capital growth property group Attacq on Wednesday announced its financial results, with net asset value per share (NAVPS) showing an increase of 19.9% since JSE listing in October last year.

Attacq, which does not pay distributions but offers its investors the prospect of capital growth, reported an increase of 19.9% NAVPS from 31 December 2012 to 31 December 2013 and 7.8% for the six months from 30 June 2013.

It also delivered on all 14 transactions disclosed in its listing prospectus, with 13 implemented by the close of the period and the final transaction, which was to secure full ownership of Brooklyn Bridge Office Park in Pretoria, was implemented during March 2014 after receiving the Competition Authorities’ approval. During the period the gross assets increased to over R15.1 billion, up 13% since June 2013.

Attacq’s gearing was conservative at 35.7% as at 31 December 2013 and 69.6% of its total external interest-bearing debt was fixed.

Morne Wilken, CEO of Attacq said “We are satisfied with the results and proud of the management team for implementing all the transactions, including the internalisation of the asset management, disposal of four non-core assets at a 17% premium to the June 2012 carrying values, and the consolidation of our international portfolio resulting in an increased shareholding in MAS Real Estate Inc.”

During the period, Attacq acquired 12.4% in African Land Investments together with Hyprop, in line with its African investment strategy. This gives Attacq a three-pronged strategy into sub-Saharan Africa: Firstly via Atterbury Africa, jointly held by Hyprop and Atterbury, which focuses on the development of retail centres in Africa.

These properties include 19,000sqm Accra Mall in Ghana, and four other developments of which two are also located in Accra, one in Kumasi, Ghana and one in Zambia, Lusaka. The developments are in different stages of completion and will come into operation over the next two years.

Secondly, via an investment in Mauritius, together with the local partner ENL Group, Attacq owns the 44,500sqm Mall of Mauritius and has remaining pipeline of around 30,000sqm of commercial bulk.

Thirdly, African Land Investments, which focuses on acquiring completed retail assets. It currently holds the 43,400sqm Manda Hill shopping centre in Lusaka.

Locally, Attacq focused on consolidating the retail assets in its portfolio by acquiring the shareholding of the minority investors in its regional shopping centres including Mooirivier Mall, the Eikestad Mall Precinct, Brooklyn Mall and Garden Route Mall.

Attacq also boosted its shareholding in Attacq Waterfall Investment Company, the company that holds the development rights for Waterfall Business Estate, to 85,9% and broke ground on the largest single-phase mall in South Africa, the Mall of Africa.

The Waterfall Business Estate has a staggering 1,7 million sqm of mixed-use approved development bulk in Waterfall between Midrand and Sandton. As at December 2013 108,363 sqm has been completed, which includes the Cell C Campus but excludes the Group 5 Head Office and a new distribution centre for MBT Technologies which were completed during January 2014.

The Cell C Campus and the first phase of Maxwell Office Park, which accommodates Cipla, Golder & Associates and Atterbury, contributed to the growth of rentable area. Attacq is moving its offices to Maxwell Office Park at Waterfall from 28 March 2014.

Progressing its international investment strategy after the close of its half-year period, Attacq invested R1.3 billion in the MAS private placement which closed on 11 March 2014 in order to maintain its stake of 47.2% in the enlarged issued share capital of MAS.

“We are seeing a recovery in European markets, which presents a good opportunity. Our investment in MAS provides a solid risk strategy and creates an important Rand hedge,” says Wilken.

Attacq opted not to list as a real estate investment trust (Reit) because it is a capital growth fund that reinvests its income instead of paying it out to shareholders, as is the norm across the sector.

The Reit structure, which most listed property funds have already converted to, requires funds to pay out at least 75% of their distributable earnings to shareholders.

Peter Clark, analyst at Investec Asset Management, says it was a good set of results – very much in line with what the market expected.

Clark says the growth in net asset value (NAV) is encouraging and also in line with expectations.

While there was very little commentary regarding what the expected NAV growth would be going forward, he expects that it will continue to be strong.

Clark says the share price does reflect a premium being paid in for future growth potential. Whether it provides a good investment opportunity will depend on an investor’s investment horizon.

The premium is understandable considering the growth and development pipeline the company has in place. A lot of the market is backing the management team, which has a great reputation and a successful track record of delivery, he says.

Attacq’s Africa strategy is a great growth avenue, Clark says.