Investors coining it from Mall of Africa’s owner Attacq

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Melt Hamman, CEO of Attacq says, “We are very pleased with our half year results and the progress made in the transition from a capital growth business model into a REIT. Melt Hamman, CEO of Attacq says, “We are very pleased with our half year results and the progress made in the transition from a capital growth business model into a REIT.

Stewart Property

South Africans invested in Attacq Limited (JSE: ATT), which owns the flagship Waterfall development precinct anchored by Mall of Africa, are laughing all the way to the bank as they are well-positioned to benefit from the group's performance.

The JSE-listed REIT on Tuesday announced an interim dividend of 40.5 cents per share for the six months ended December 2018, which is well in line with guidance.

Its distributable earnings per share increased by 9.5% to 45 cents per share, as a result of the completed developments generating additional income and growth in the dividend received from MAS.

However, Attacq’s net asset value per share (NAVPS) decreased by 2.39% from R24.24 mainly due to the full-year dividend payout of R520m in October 2018 and impairments against the group’s sub-Saharan Africa retail assets.

“We are very pleased with our half-year results and the progress made in the transition from a capital-growth business model into a Reit,” said Attacq CEO Melt Hamman.

“Our focus remains on the four key value drivers underpinning our business model, namely the SA portfolio, developments in Waterfall, investment in MAS and our rest-of-Africa retail investments,” Hamman said.

Its South African portfolio is valued at R21.0 billion which, at 75% makes up the majority of the group’s total assets. The portfolio comprises 52.5% retail, 37.9% office and mixed-use, 7.9% industrial and 1.7% hotel.

Total rental income increased by 12.4% to R1.0 billion, which is largely due to the additional rental income from the buildings completed during the 2017 and 2018 financial years.

COO Jackie van Niekerk says, “The strong average trading density increase of 6.9% exceeds the market average, with the largest contribution coming from our well-located flagship Mall of Africa; which had a 12.7% increase in trading density. The Mall continues to benefit from the densification of the overall Waterfall node.”

The overall portfolio vacancies decreased to 5% from 7.7% at June 2018, mainly as a result of securing the Dis-chem lease for our industrial warehouse and leases concluded at Gateway West with Sage and Spaces. Subsequent to 31 December 2018, vacancies reduced to 4.6%.

The Company will be participating in the Edcon’s newly announced recapitalisation programme. Attacq’s effective South African Edcon exposure will settle at 22 945m² of PGLA by 1 October 2019, with effective gross monthly rental at R3.2 million; and the total PGLA exposure estimated at 3%. Attacq’s involvement in Edcon’s recapitalisation programme will negatively impact its 2019 financial year distributable earnings by R4.1 million.

The total value invested in developments at Waterfall has increased to R2.6 billion, up from R2.3 billion at 30 June 2018. This includes buildings under construction, remaining development bulk as well as the industrial bulk in the Sanlam joint venture.

One of Attacq’s four key value drivers is the investment in MAS, where the company held 22.8% at reporting period. During the six-month period ended 31 December 2018, Attacq received cash dividends of R97.3 million from MAS.

Despite being only 3.1% of total gross assets, the performance of Attacq’s Rest of Africa retail investments was disappointing as a result of challenging economic conditions. The decline in the investment value was the result of an impairment of R370.2 million.

The group said it was targeting dividend growth of between 7.5% and 9.5% for the 2019 financial year.


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