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Deals dry up for Attacq

Focus to be on Waterfall City and offshore exposure.

The growing trend of seeing fewer deals to conclude in the market is driving capital growth fund Attacq to focus on its mammoth mixed-use development Waterfall City.  

Attacq is steaming ahead with the rollout of its pending 323 hectares Waterfall City development, sandwiched between Sandton and Midrand.

As Attacq CEO Morné Wilken puts it: “seeing new deals in the market is tough, but we have a competitive edge in Waterfall.”

The property counter, with a market capitalisation of R17 billion, is making inroads on Waterfall City.  

Of Attacq’s total approved development bulk of 1.8 million square metres for the 12 months to June 30, about 240 000 square metres was completed – bringing the remaining bulk for development to 1.3 million square metres. This bulk will be rolled out in stages over the next ten to 15 years.

“If we play our cards right then Waterfall could be the new CBD of Gauteng. A number of corporates are already thinking of consolidating in Waterfall,” says Wilken.  

Already, Attacq is clocking up new developments at Waterfall; the 40 000 square metre office building for PwC, an 8 910 square metre industrial property for Torre Industries and a 7 086 office building for Magwa House.

The developments are expected to be completed between 2016 and 2018. The game changer for Waterfall, Wilken says, is the 131 038 square metre super-regional Mall of Africa development. “Mall of Africa will be the tipping point. It will put Waterfall City on the map.”

Attacq has had a rousing year of deal-making, acquiring the minority shareholding of 18.7% in Attacq Waterfall Investment Company (AWIC) – becoming the sole shareholder. This transaction enables Attacq full control of the entire Waterfall commercial precinct and future developments. 

Other acquisitions include a 25% non-controlling interest in Lynnaur, the owner of the Aurecon Building in Pretoria, for R50 million and the acquisition of PwC Sunninghill offices for R71.7 million.

This saw the value of Attacq’s property portfolio rise by 26.2% to R16.1 billion, up from R12.8 billion in the previous year. Attacq’s rental income increased by 47.6% to R954.1 million. It further posted growth of 17.9% in net asset value per share to R18.98 from R16.10.

Market watchers have in the past raised concerns about Attacq’s funding structure for its Waterfall project given the capital intensive nature of developments. But Attacq has restructured its R3.25 billion loan facility with Nedbank, paving the way for Absa to back its development plans.

Attacq’s financial director Melt Hamman says the company has enough bank facilities to see through the development, as Absa’s backing “added capacity” to its capital base.

Its average cost of debt reduced to 9.0% with 75% of total committed debt facilities hedged. “More than 70% of debt in the fund have terms of three years and longer,” says Hamman. Its gearing for the period was 36.3% compared with 34%.

More industry players rate Attacq positively as it has doubled its asset base from R12.7 billion, when it listed nearly two years ago, to R23.3 billion.  

Says listed property manager for Old Mutual Investment Group’s MacroSolutions boutique Evan Robins: “The fund is on track to deliver what it promised on listing.”

Robins says Attacq’s results were in line with expectations. “But it seems that the market was expecting a positive surprise,” he says.

Another focus for Attacq will be on its retail assets, making up of the Garden Route Mall in George, Brooklyn Mall in Pretoria, MooiRivier Mall in Potchefstroom and more. It also has exposure to retail assets in the African continent such as Ghana’s Accra Mall and West Hills Mall and Manda Hill through its venture AttAfrica.

Despite consumers’ scaling back on retail therapy, which is expected to impact foot traffic at shopping centres, Wilken says the focus will be on dominant regional malls in large nodes, which are seemingly insulated from market pressures.  

Another game changer was Attacq’s offshore move, acquiring a 48.7% stake in two shopping centres in the Cyprus capital of Nicosia.

Attacq was down 0.34% to R22.81 on Tuesday.   

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David Kop

David Kop

The Financial Planning Institute of Southern Africa (FPI)
Moneyweb Click an Advisor
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