At a time when Attacq’s counterparts are bulking up on their offshore exposure, the capital growth play will largely focus on delivering its developments at the grandiose Waterfall City, located along the N1 near Midrand.
Already a number of SA-focused property counters are hitching their wagons in Central and Eastern Europe.
Attacq already has exposure to these regions through its ownership (jointly with Atterbury Europe) in a Serbia-based property portfolio comprising seven shopping malls. Attacq also has exposure to the Cyprus property market where it owns two shopping malls.
In addition to its direct property investments, Attacq has a 45% stake in Western Europe-focused MAS Real Estate and a 19.9% stake in Germany-focused Stenham European Shopping Centre Fund.
Unlike its peers, who have recently made investments into Europe, Attacq CEO Morné Wilken says the company has an advantage because it already has exposure to the region. Sector heavyweight Redefine Properties entered Poland and Growthpoint is on the prowl for opportunities in Europe. Read more here.
About 24% of Attacq’s total assets, valued at R27.1 billion for the six months to December 31, are based outside of SA and includes its malls in Ghana and Zambia. It recently acquired a 25% stake in Nigeria’s 22 349 square metre Ikeja City Mall with the remaining 75% acquired by blue-chip mall owner Hyprop Investments.
On whether Attacq might grow its exposure to Europe, Wilken says the company will assess opportunities if the return on capital “makes sense”.
“We have become much more selective on where capital is placed over the last few years. We now have a focus and just don’t do every transaction,” Wilken tells Moneyweb.
Stanlib’s head of listed property funds Keillen Ndlovu, says as the SA economy slows against the backdrop of rising interest rates, which will likely impact the returns of property investments, most counters will have to look offshore for growth through yield-accretive acquisitions.
Attacq, which does not declare dividend payouts, has increased its net asset value (NAV) per share (adjusted for deferred tax) by 27.6% to R21.72 year-on-year for the period under review.
After its rousing Europe and Africa deal-making, the focus for Attacq will now be on delivering its plans at Waterfall City.
The much-anticipated 131 000 square metre Mall of Africa, which is believed by Attacq to be the largest single-phase shopping centre to be built from the beginning in SA, is on track for its opening on April 28.
The super-regional mall, which already boasts an impressive line of international retailers like H&M, Cotton On, Starbucks, Forever 21, Tommy Hilfiger and more, could be extended by 25 000 square metres over time.
Says Wilken: “If we have the demand from tenants then the extension will happen at Mall of Africa. But I think that won’t happen in the first two years.”
Mall of Africa will add on to Attacq’s retail properties, which include New Town Junction in Johannesburg, Mooiriver Mall in Potchefstroom and Garden Route Mall in George.
Attacq has a development bulk of 1.2 million square metres at Waterfall City, and has so far developed 335 000 square metres. A further 241 000 square metres is under construction; largely office properties. “We will roll-out space on the back of leases… and we will be cautious specifically where we are in the current market,” says Wilken.
Attacq’s stock was among the worst performers for 2015, delivering a negative total return of 17.09%, figures from Cape-based Catalyst Fund Managers show. So far this year, Attacq’s share price has fallen by 17.78%. At current levels, Ndlovu says there seems to be value in Attacq’s stock given that it’s trading below NAV (excluding deferred tax).
“However, the catalyst for a re-rating in its stock will be securing sizable transactions at the Waterfall City following completion of Mall of Africa and successful implementation of an offshore strategy,” Ndlovu adds.