Attacq interim dividend surges 46.7% amid robust property demand at Waterfall City

Attacq, the JSE-listed REIT that has Waterfall City as a key development focus, lifted its interim dividend a hefty 46.7% to 44 cents a share and has revised its guidance upward for the full year.

Distributable income per share (DIPS) was up 49.1% to 55 cents, and CEO Jackie van Niekerk said they had also revised upwards its distribution income per share guidance for the full year to 27% from 24%.

DIPS also benefited from a full six months from its transaction with the Government Employees Pension Fund (GEPF) - the fund acquired a 30% stake in Attacq Waterfall Investment Company in October 2023 - versus only two months in the comparative period.

“The period saw us continuing to execute against our Horizon 2030 strategy. Our efforts are reflected in increased gross revenue and rental income, improved cost-to-income ratio from 25.4% to 22.4%, and the new blue-chip clients attracted to our precincts,” Van Niekerk said in an online presentation. She mentioned that there had been strong growth in their retail hubs in January.

Chief financial officer, Raj Nana, said their growth into the second half would be backed by a strong balance sheet supported by a successful initial public auction under the DMTN program.

He said the upward revision to the DIPS guidance was driven by the full-year benefit of the GEPF transaction, benefits from the acquisition of the remaining 20% of Mall of Africa in May 2024, growth in net operating income due to increased revenue from managing co-owned properties, as well as higher market rentals.

PV system installations currently underway will support an increase in the electricity recovery ratio and improve operational resilience. Backup water capacity is also being scaled up, and by 2026, all Attacq’s assets will have backup water capacity between 2 to 5 days. Smart water metre readers are being introduced.

DIPS from Waterfall City rose by 10% to 26.3 cents per share, driven by higher net operating income and increased interest in Mall of Africa. DIPS from the Rest of South Africa surged by 125% to 29.7 cents per share, along with significantly reduced net finance costs.

Gross revenue rose by 6.2% to R1.5 billion, with group rental income having grown by 15.1% to R1.5bn, mainly due to higher rental escalations and an additional 20% interest in Mall of Africa. Like-for-like rental income increased by 7.7%.

Gearing remained low at 25.9%. Occupancy and collection rates were high at 91.9% and 99.6%, respectively.

Van Niekerk said that demand for collaboration hubs, or offices, was continues to rise, driving growth in market rentals. Over the past six months, Attacq collaboration hubs had welcomed global organisations such as Pragma, Organon, Nokia, Chieta, Bayer, and Siemens Energy, with the occupancy rate for collaboration hubs post-period end increasing to 89.5% from 87.7%.

Additionally, Attacq introduced new retail brands and enhanced its retail spaces. In its retail-experience hubs, 15 new stores were introduced and 41 were refurbished, with additional brands such as United Colors of Benetton, Decathlon, and Freedom of Movement.

During this period, Mall of Africa became the world's largest retail mall to achieve EDGE Advanced certification, recognising its 53% energy savings and 28% reduced water usage. During the interim period, Attacq disposed of its Rest of Africa retail investments in exchange for a 4.3% interest in Lango Real Estate.

Development activity (under construction and approved pipeline) at Waterfall City amounted to 43,988 square metres of gross lettable area. Developments at Waterfall City in the longer term include additional logistics and warehousing space, additional collaboration space, more residential, and a conference and hotel linked to the retail hub.

Van Niekerk said that while the group might look at other acquisition opportunities offshore and locally, their focus at present is on the one million square metres of development potential on the Waterfall City land that has been paid for, and features some of the best infrastructure in the country.

At MooiRivier Mall in Potchefstroom, refurbishments, water solutions, rooftop PV systems, and upgraded parking have led to a 24.1% increase in trading density and a 19.4% rise in the mall's value over three years.

“We are excited about our prospects for the next year and for the three years to come,” said Van Niekerk.

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