The share price of JSE-listed real estate investment trust (Reit) Attacq, which is developing Waterfall City, rose by nearly 22% on the morning of February 13 after the company announced that it had entered into a nonbinding term sheet with the Government Employees Pension Fund (GEPF), represented by the Public Investment Corporation.  

The GEPF will acquire a 30% interest in the ordinary shares and shareholder loans held in Attacq Waterfall Investment Company (AWIC), a wholly-owned subsidiary of Attacq and the owner of Waterfall City.

The investment will be made through issuing new AWIC equity, acquiring AWIC shareholder equity and shareholder loans from Attacq, and the extension of an additional pro rata shareholder loan by the GEPF.

The conclusion of the transaction will result in the GEPF owning 30% of AWIC for an estimated cash consideration of R2.8-billion.

The proceeds will be used to optimise the capital structure of both AWIC and Attacq by deleveraging the group’s balance sheet, enhancing the liquidity position of Attacq and improving investment capacity.

“We are pleased by this transformative transaction for Attacq, to introduce the GEPF as a long-term strategic investment partner to AWIC. Working closely alongside our new partners, we remain committed in fulfilling our strategic purpose of creating sustainable value for all stakeholders.

“The transaction aligns with Attacq’s strategy to optimise the group capital structure by creating a significant deleveraged balance sheet with the capacity to fund the world-class Waterfall City development pipeline with no additional capital required from shareholders in the medium term,” comments Attacq CEO Jackie van Niekerk.

“Furthermore, Attacq will benefit from numerous cost savings and efficiencies, while retaining its important Reit status. Attacq will retain full control of AWIC through its majority stake and will continue to provide asset management and administration services to AWIC at market-related fees,” she adds.

“Attracting this significant investment from the GEPF is a major affirmation of the quality of Waterfall City, one of South Africa’s fastest growing work and lifestyle precincts. We can now expedite the ongoing rollout of developments within Waterfall City as part of our precinct strategy which focuses on creating safe, smart and sustainable retail-experience, collaboration and logistics hubs,” acclaims Attacq CIO Peter de Villiers.

“We are truly excited about this milestone transaction for Attacq and Waterfall City. It also provides the GEPF with a unique investment opportunity in the co-ownership of a world class city.

“Once implemented, Attacq will see its gearing reduce from 37.2% to [about] 24% on a pro forma basis providing the balance sheet to develop out Waterfall City. Attacq’s capital structure will also be optimised resulting in a reduced cost of capital thereby enhancing returns for Attacq’s shareholders. It’s a win-win for all stakeholders,” avers Attacq CFO Raj Nana.

The transaction is subject to the fulfilment of certain conditions. Since the transaction is classified as a Category 1 transaction in terms of the JSE listings requirements, majority shareholder approval is required.

Attacq’s share price rose to R8.71 on the news, representing a 21.99% increase on the close of R7.14 a share on February 10.