Attacq on track to deliver on upper end of full-year DPS growth target

Attacq Limited has announced an interim dividend of 45.0 cents per share for the six months ended 31 December 2019. This is an increase of 11.1%, positioning the Group to deliver on the upper end of its full-year guidance previously communicated to the market.

Attacq’s core distributable earnings per share increased by 23.9% to 49.8 cents per share; however, the Group decided to declare a dividend of 45.0 cents per share and retain the balance to fund capital expenditure. The company’s strong performance can be attributed to its focus on its four key drivers: a high-quality South African portfolio, developments at Waterfall, the investments into the Rest of Africa as well as the strong growth in dividends from its investment in MAS.

Melt Hamman, CEO of Attacq,says, “Since converting to a REIT, we have implemented a focused approach to deliver sustainable distributable earnings. We are pleased with the results achieved for the six months ended 31 December 2019, as they attest to the success of our strategy and the quality of our portfolio.”

Overall, Attacq’s South African portfolio comprising retail, office and mixed-use, light industrial and hotel properties delivered strong results despite the subdued operating environment. The average trading density for the year ended 31 December 2019 increased by 5.7%, while the Mall of Africa continues to perform well with a 10.1% growth in trading density.

Jackie van Niekerk, COO said, “We are delighted by the continuous growth of Mall of Africa. The Mall delivered impressive trading growth and increased footfall as a result of the Waterfall City densification. We remain focused to provide our shoppers with authentic experiences.”

Net profit from property operations, excluding the International Financial Reporting Standards (IFRS) adjustment for straight-line leasing and profits from the sale of sectional title units, increased by 16.7% to R745.2 million (31 December 2018: R638.7 million). On a like-for-like basis, net operating income increased by 7.6%.

Waterfall remains a key driver in Attacq’s core business. During the period, six buildings were completed in Waterfall with a PGLA of 18 642m². The centrally located node, with ease of access, has another six buildings under construction. These developments include the Deloitte head office, Waterfall Corporate Campus office park, Ellipse Waterfall, Nexus Courtyard Hotel as well as Nespresso warehouse. The Deloitte head office reached practical completion on 31 January 2020. The six-storey, 42 500m² office building will welcome about 3 200 new employees as of 1 April 2020. This is another example of Waterfall City being the preferred location for corporate consolidation.

Attacq continues to create an urban environment within Waterfall City and is particularly excited about Ellipse. Ellipse is the new iconic high-rise luxury apartment development in the heart of Waterfall City, spread over four towers. Construction of 269 units has commenced with expected completion in Q1 FY2022.

During the six months ended 31 December 2019, the Group received cash dividends of R121.2 million from its investment in MAS, up 24.5% from the prior period. This investment provides the Group with geographic diversity by providing it exposure to the higher growth markets of central and eastern Europe.

“The growth in core distributable earnings of 23.9% was underpinned by good like-for-like growth in net operating income as well as strong dividend growth from MAS. This has helped us affirm our DPS growth target for the full-year ending 30 June 2020 at the upper end of the range, being approximately 10.0%” said Raj Nana, CFO.

The unaudited guidance is based on a number of assumptions: that the group will be able to achieve the forecasted rental income, based on contractual terms and anticipated market-related renewals; that tenants will be able to absorb the recovery of rising utility costs and municipal rates; the expected roll-out of the current and budgeted development portfolio; and that there will be no unforeseen circumstances, such as major corporate tenant failures or a deterioration in the macroeconomic environment.

Attacq continues to focus on its key drivers, namely the South African portfolio, developments at Waterfall and the investment in MAS in order to remain defensive and deliver long-term shareholder value.  The intention is to exit our Rest of Africa retail investments and to utilise the proceeds to reduce the debt levels”, concluded Hamman.

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