Attacq posts steady results amidst volatile business climate

Waterfall – The tougher global economy, the strengthening of the rand and international market volatility had an impact on the interim results of Attacq [JSE:ATT] for the six months ended 31 December 2016.

Attacq is a South African company with a diversified portfolio and development pipeline and describes itself as having a creative approach to real estate investments and developments. It had a total asset value of R27.1bn at 31 December 2016.

Since inception to 31 December 2016 Attacq has achieved a Compound annual growth rate of 27.7% for net asset value per share adjusted for deferred tax (adjusted NAVPS).

According to Morné Wilken, CEO of Attacq, the company would have hoped for better results, but one needs to appreciate the volatile current global economic context as well as the dynamics in the South African economy.

He explained that Attacq is a long-term property investment. The adjusted NAVPS decreased by 1.7% year-on-year from R21.72 to R21.35, mainly due to the strengthening of the rand and international market fluctuations.
 
Attacq said in a statement that it has enjoyed healthy income growth from its core portfolio, of which the weighted average lease expiry is 6.5 years. This secures greater sustainability of investment in developments and resultant long-term growth.

“Attacq’s development portfolio is focused in Waterfall, Gauteng. Development in Waterfall is a strategic priority for Attacq as an infill development that is easily accessible and centrally located between Johannesburg and Pretoria. The concept behind Waterfall is to create a new lifestyle city where people can live, work and play,” explained Wilken.

READ: Mall of Africa set to be 'catalyst for regional growth' for Attacq

Crown jewel

Waterfall includes the Mall of Africa, the company’s super regional retail development as well as mixed-use, office and light industrial developments.

“Our crown jewel, Mall of Africa, performed above expectation in the eight months of trading to 31 December 2016. The Mall of Africa generated an exceptional monthly average trading density of R2 777/m² and achieved more than 1.1 million visitors per month since opening on 28 April 2016. The mall’s average gross rental per square meter is about 16% below other comparable super regional malls. This positions Mall of Africa well for future value growth,” said Wilken.
 
Attacq’s quality portfolio includes 58% of retail properties. According to Attacq, all of its regional malls across SA are performing well. The period has also seen the consolidation of four retail properties in Stellenbosch into the centrally located Eikestad Precinct.

Also, the second wave of development beyond the Mall of Africa and Waterfall park is well underway.

“Four more buildings were completed in Waterfall in the last six months; the Allandale Building, Dimension Data, Torre Industries and the Amrod buildings. These buildings increase the total directly held in attributable primary gross leasable area by 70 424m2 in Waterfall,” said Wilken.
 
“Currently we have active enquiries for more than 298 000 m2 of business space in Waterfall, including 172 000 m2 of light industrial space,” says Wilken. Following the reporting period an agreement has been concluded for a regional distribution centre of about 32 000m2 for a highly respected global brand. More announcements in this regard will follow soon.

As for its international investment strategy, Attacq will continue forming joint ventures with partners with local expertise, while bringing investment and property skills to its investments in larger or metropolitan areas in Europe and Africa.

The Attacq strategy for Africa remains to optimise the dominating portfolio of its five large retail assets in major cities in Africa through active asset management.
 
“Attacq management has taken a conscious decision to focus on its core investments. Attacq evaluates the performance of its assets on an ongoing basis and recycles capital to be invested to the benefit of our shareholders,” said Wilken. In the period Attacq has recycled R1bn, optimising capital to be focused on core developments and investments.
 
Wilken remains upbeat about the business future and identified several opportunities.
 
“The Waterfall development pipeline for the next 10 to 15 years holds significant investment promise. The diversification of the Attacq portfolio in South Africa and wider afield ensures sound risk management. Long term we expect the rand to soften, in turn counter volatility and enable our diversification strategy to stand our shareholders in very good stead,” said Wilken.

He foresees continued slower South African growth, due to political volatility in the country. He also identified pressure on resources as potential business risks for the country.

Wilken stated that the current value of the rand coupled with the uncertainty caused by Brexit and the new US Trump presidency, will have an impact on Attacq’s offshore markets in the short term.