Attacq, the major development partner in Waterfall City, lifted its full year dividend 16% to 58 cents per share, a strong uplift given that South Africa-focused listed property groups have faced major headwinds this year due to load shedding and the weak economy.
The JSE-listed REIT’s share price reflected that strength – it gained 0.36% to R8.25 yesterday morning, moving its year-to-date gain to 7.5%, in contrast to the South African Listed Property Index, which has declined 10% year-to-date.
Both occupancy and collection rates traded high during the period at 92.5% and 100.7%, respectively.
Distributable income per share increased 14.5% to 71.9c, with the main growth coming from Waterfall City.
Distributable income growth from its Rest of South Africa operations, mainly retail centres, was more pedestrian at 2.4%, but this figure was impacted negatively by higher expenses for diesel, generators and maintenance, CEO Jackie van Niekerk said in an interview yesterday.
Group property expenses, excluding expected credit losses and cost of sales of sectional title units, increased 12.7% to R891.8 million mainly due to higher diesel expenses of R43.9m and maintenance of R23.8m.
Additional maintenance costs were incurred to improve the retail-experience hub portfolio's energy efficiency and resilience. Property expenses increased by 8.4% (8.8%) on a like-for-like basis.
Van Niekerk said they were working to increase renewable energy capacity to 25% of their total consumption by 2030, from about 5.3% currently.
There would be an aggressive solar power roll-out over the next 24 months, and a power purchase agreement was also expected to be reached in 12 months.
She said they expected the operating environment, characterised by low economic growth and high interest rates, to continue for the foreseeable future.
In the new financial year they would also not receive a dividend from the 6.5% investment in the MAS property group, as MAS intended to shore up liquidity in Europe’s high interest rate environment.
She said there was also a good pipeline of projects at Waterfall City.
One of these was the first phase (about 150 000 square metres) of new logistics land, most of which had already been subscribed for. The development of this was expected to begin at the end of the calendar year.
This represented a portion of about 600 000 square metres of land for logistics developments that Attacq had identified in 2018 already, after it ran out of its existing available logistics land.
Since then it has been working on putting the infrastructure in place on the land. Further data centre developments were also anticipated at Waterfall City.
In the past year, positive retail trade in Mall of Africa resulted in a 10.8% growth in rental income supported by 21 new brands being introduced.
This resulted in a 91.6% increase in turnover rental and a 71.4% increase in third party income at Mall of Africa, which was becoming a preferred destination for exhibitions and advertising.
Highlights in the year included the Government Employee Pension Fund’s (GEPF) R2.7 billion investment at Waterfall City, increased density at the Plumblink head office and distribution centre as well as the completion of Phase 2 of Ellipse Waterfall, the luxurious residential development in the heart of Waterfall City, adding 30 586 square metres of gross lettable area.
Chief financial officer Raj Nana said the balance sheet remained strong, and post the GEPF transaction loan-to-value (LTV) would reduce to 26%. Gearing at the past year-end was 37.3%. He said the distribution growth of 16% was a “considerable achievement” in the current environment.
Waterfall City, the flagship retail, residential, logistics and office precinct, had performed well against all metrics.
“The ability to roll out reliable infrastructure has assisted in mitigating local government service delivery challenges, and the City has continued to attract local and global blue-chip industrial and office tenants including Cisco, Sage, Cotton On, Vantage Data Centres, Dimension Data, Accenture, Pfizer, Cummins and Dis-Chem,” he said.
BUSINESS REPORT