JSE- and A2X-listed real estate investment trust (Reit) Attacq has posted a higher distributable income per share (DIPS) of 36.9c for the six months ended December 31, 2023, compared with the DIPS of 35.9c apiece reported for the six months to December 30, 2022.  

CEO Jackie van Niekerk attributes the 2.8% year-on-year increase in distributable income to higher DIPS from Waterfall City, which increased by 13.8% year-on-year to 23.9c, compared with 21c in the prior comparable period, as well as increased DIPS from other South African operations, which increased by 24.5% year-on-year to 13.2c.

Overall, Attacq recorded higher rental income and reduced net finance costs in the six months under review, leading to an interim dividend increase of 3.4% year-on-year to 30c, compared with a dividend of 29c in the prior year.  

The dividend equates to an 81% payout ratio, or R210-million, of the group’s R253-million distributable income.

Groupwide occupancy levels as at December 31 were at 93.7% for 695 949 m², with vacancies relating mainly to Brooklyn Mall, Eikestad Mall, Glenfair Boulevard and Mall of Africa.

Attacq in October last year concluded a R2.7-billion Waterfall City transaction, with the Government Employees Pension Fund (GEPF) acquiring 30% of Attacq Waterfall Investment Company.

The Reit used these proceeds to reduce interest-bearing debt by R2.9-billion to R5.9-billion, resulting in an improved interest cover ratio of 1.93 times from 1.72 times in the prior comparable period. The group also managed to decrease its gearing to 25.3% from 37.3% over the two financial years.

The Waterfall City transaction is poised to have a more marked effect on distributable income in the second half of the financial year, hence Attacq’s increase in distributable income growth guidance of between 10% and 12% for the full-year.

Attacq also disposed of its remaining stake in MAS for about R773-million after the reporting period owing to debt challenges and suspended dividends at MAS.

Van Niekerk deems the period an excellent half-year for Attacq, with the company having closed out key strategic transactions to ensure sustainable capital structure.

CFO Raj Nana says rental income growth of 9.6% year-on-year to R1.3-billion, coupled with 4.1% lower finance costs, bolstered the group’s balance sheet.

The Reit currently has 44 676 m² of space under development, with developments under construction having an estimated capital cost of R556-million and the pipeline of developments having a total value of R886-million.

Some of the developments under construction include logistics hubs in Waterfall City, as well as Phase 3 of the Ellipse Waterfall residential development.

The company also has 2.8 MW of renewable energy installations approved.

Attacq’s portfolio is valued at R22.1-billion as at the end of December, with Waterfall City comprising the bulk of the value at R14.2-billion and accounting for 64% of the Reit’s DIPS.

The Reit’s flagship Waterfall City gross leasable area comprises 113 629 m² of retail-experience hubs, 199 116 m² of collaboration hubs, 139 540 m² of logistics hubs, 12 459 m² of hotel space and 10 060 m² of ‘other’ space.

In the six months under review, net asset value per share decreased to R17.25, from R17.65 in the prior comparable six months.

Nana and Van Niekerk agree that South Africa continues to face several headwinds, including energy and water disruptions and shortages, low business confidence, political uncertainty on certain matters and persistently high inflation and interest rates, all of which are likely to constrain economic growth and, consequently, the real estate market.

Attacq is, nevertheless, well positioned with available liquidity of R1.1-billion to navigate these challenges, particularly following the GEPF transaction, and continue generating income growth, they point out.