Attacq maintains its strong liquidity position with solid interim results

Mall of Africa.

Attacq Limited 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, for the six months ended December 2021.

This growth was mainly driven by the dividend received from its investment in MAS of R46 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 its strategy to reduce debt and to strengthen its balance, the REIT successfully managed to lower its gearing from 46.3% as at 31 December 2020 to 38%, 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 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”, commented CEO of Attacq, Jackie van Niekerk, during a recent media breakfast. “Our results are also a testament to the team’s proactive and agile approach in meeting market challenges and adapting our strategic response accordingly. The 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’s retail-experience hubs performed well, reporting a 96.2% occupancy rate. In addition, year-on-year weighted average trading density grew by 8.7% with Mall of Africa increasing by 14.9%, Garden Route Mall increasing by 10%, and Lynwood Bridge’s retail increasing by 9%. All assets indicate the increased levels of sales as the group wades through to return to 2019 levels.

Its collaboration hubs, which focus on space optimisation, convenience, and space-as-a-service, assisted Attacq in improving its office utilisation rates towards the end of the previous calendar year, especially as businesses start implementing return-to-work policies and hybrid working models. The group recently announced its partnership with IWG (Regus and SPACES in South Africa) to collectively expand their service offerings in a response to the varying office needs and emerging ‘hybrid’ shift. Starting with Lynwood Bridge Precinct, and then the Waterfall City Precinct, Attacq is broadening its foot print by offering flex-space options which will be managed by IWG.

The group’s logistics hubs reported 100% occupancy during the period.

“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,” added van Niekerk.

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 as at 31 December 2020. This was mainly driven by bad debt write-offs, provision for bad debts, and municipal charges.

Net operating income on a like-for-like basis decreased by 4.6% (31st 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 as at 30 June 2021. These respective changes are attributable to Attacq’s concerted efforts to dispose of non-core assets.

“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“, commented CFO of Attacq, Raj Nana.

In light of the ongoing global economic uncertainty, Attacq’s board elected to continue taking a conservative approach to capital management, resolving 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,” concluded van Niekerk.