Attacq is undervalued and its burgeoning Waterfall pipeline makes it SA’s most attractive listed developer, CEO Morne Wilken says.
Attacq owns about 1-million square metres of developable land in Midrand’s Waterfall precinct, of which 608,000m² is already serviced.
Speaking at the release of financial results for the year to June, Wilken said Attacq offered a value proposition in that it already had development opportunities in Waterfall, while other companies had to search for them.
"We have development opportunities sitting on our doorstep at Waterfall. Our competitors have to look for opportunities across SA," he said.
During the financial year, the value of the developed Waterfall portfolio increased R202.9m to R3.6bn, comprising 13% of total gross assets.
"Waterfall is the ideal location for corporate consolidation due to its central location and ease of access to the rest of Gauteng. Waterfall City is anchored by the Mall of Africa and it is evident that Waterfall is becoming the centre of gravity for many retailers," Wilken said.
Attacq recycled R1.9bn of capital and celebrated the first anniversary of the opening of its "crown jewel", Mall of Africa.
"The mall performed well during its first full year of trading. It has created more than 4,000 permanent jobs and has generated an average monthly trading density of R2,564/m² during the financial year."
Attacq had focused on "right-sizing" the mall and planned to introduce a number of new tenants including international brands in the next few months.
"Our active asset management continues.
"Our aim is to enhance our entertainment offering, further increasing dwelling time at the mall," Wilken said.
Attacq’s adjusted net asset value per share rose 3.2% to R22.59 in the year to end-June. Attacq’s share price closed 0.91% higher at R18.85 on Tuesday, 16.6% lower than the R22.59 net asset value per share. The company was on track to pay its first dividend — 73c per share — in 2018 and would convert to a real estate investment trust (Reit) in 2019.
Net asset value growth for investors has been disappointing since Attacq listed in October 2013 at R17 per share. Tuesday’s close represents a share price gain of only 10.9% in four years.
Stanlib’s head of listed property funds, Keillen Ndlovu, said Attacq’s decision to become a Reit had led him to increase his investment in the group.
"South African investors prefer income-paying yield property stocks instead of developers or net asset value plays," Ndlovu said. "Our market is more yield driven as opposed to net asset value driven. What net asset values are can be generally debatable, while cash distributions are simple to value as what you see is what you get."
Reported diluted headline earnings per share increased about 92% in the year to end-June compared with the previous period, while vacancies across its retail and office portfolios rose. Profit fell 56.7%, to just more than R600m.
This was due mainly to the strengthening rand, fair value adjustments and a R480m one-off payment the previous year.