Attacq Limited, through its wholly owned subsidiary Attacq Waterfall Investment Company (AWIC), has conditionally agreed to dispose of an undivided half share of the leasehold rights and rental enterprises of two logistics properties and undeveloped land to Equites Property Fund.
With the transaction to take effect from the 1st of September 2021, the total purchase consideration of R444 505 437 includes the Amrod and Massbuild distribution centres and 56 723m2 of undeveloped land that will be co-developed by Attacq and Equites with Cotton On as a tenant within the Waterfall Logistics Hub.
The disposal is in line with Attacq’s strategy to reduce its debt levels and to improve its interest cover ratio while retaining 50% of the disposal assets. This transaction, alongside previous asset disposals, will contribute to a further de-gearing of Attacq’s balance sheet.
Considering this disposal and the proceeds generated by the disposal of its 50% interest in the Deloitte building, shares in MAS Real Estate and 2 Elgin, Attacq’s gearing ratio of 50.4% as of the 31st of December 2020 would reduce to 43.4%.
Equites will fund the transaction from available debt facilities. The REIT’s loan-to-value (LTV) ratio on a pro-forma basis as of the 1st of September 2021 will increase marginally from 31.2% to 32.7%.
The purchase price of the undeveloped land to Equites is R32 904 375 with an estimated development spend of R66 241 670 and a total development cost to the REIT of R99 146 045. The estimated yield on the total development cost is 8.1%.
With the Cotton On development to be situated in the heart of the Waterfall Logistics Hub, both REITs will jointly undertake the retailer’s logistics development with Equites funding 50% of the total development costs.
Scheduled for completion in May 2022, Cotton On has entered a ten year and two-months lease for the 20 796m2 distribution centre with an estimated commencement date of 1 May 2022.
The disposal transaction is subject to conditions precedent and approval from the Competition authorities.