Attacq writes down asset values in the rest of Africa
The group looks at ways to introduce liquidity before loans come due in 2020
Attacq, the real estate investment trust (Reit) behind the development of Waterfall City in Midrand, says it has written down the value of its assets in the rest of Africa by R370m amid a difficult trading environment.
The company co-owns malls in Ghana, Nigeria and Zambia with property groups Hyprop and Atterbury. Hyprop last week impaired its rest-of-Africa business by R1.1bn and said it wanted to exit it.
Attacq chief investment officer Peter de Villiers said the company was looking at ways to “introduce liquidity” into its rest-of-Africa portfolio.
Commodity prices were “largely unsupportive” of those economies, and even though inflation and interest rates were moderating, tenancy levels remained depressed. A number of SA clothing retailers were unlikely to renew their leases in those malls, partly because they were focused on their home market, De Villiers said.
Attacq holds the African assets through a joint venture (JV) called AttAfrica, along with unlisted property developer Atterbury and shopping centre owner Hyprop. Each group owns a third of the venture.
While Attacq had not received any offers for the assets yet, CEO Melt Hamman said the company had three options it could use with respect to Africa. “We are considering what we want to do with our assets in Africa. In 2020 loans owed by the JV will come due and we will need a liquidity event. To achieve this, we could restructure AttAfrica. We could also exit Africa all together or sell off some of the assets. So while the assets, which make up about 3% of our asset base, are not held for sale yet, this can change if we receive offers,” said Hamman.
Craig Smith, head of research at Anchor Stockbrokers, said it would not be a surprise if Attacq was looking at ways to exit its rest-of-Africa assets. However, finding a buyer could be tough, Smith said, citing Growthpoint Investec African Properties and Grit Real Estate as two of the “large credible players” that might be interested.
Smith said the rest of Africa was the one “negative” in Attacq’s otherwise strong results for the six months ended December. He said the region was “reasonably immaterial” to the group, since it accounted for just 3% of total assets.
Attacq said on Tuesday its distributable earnings per share grew 9.5% to 45c in the interim period. While distributable earnings from the rest of Africa fell to R31m, from R42.7m a year before, the R21bn SA portfolio grew distributable earnings by 17.7%.
“That’s a solid outcome in this environment, especially given the longer-term play that they’re busy rolling out in Waterfall,” Smith said.
The Waterfall node in Gauteng had now reached “an inflection point” in that it was rivalling Sandton and Rosebank in the offices and logistics segments of the property market. Attacq plans to introduce residential developments in Waterfall City. The first of those will be a four-tower development with about 620 residential units, west of the Mall of Africa.
Meanwhile, Hamman said the Reit would spend another R28m on buying generators, as Eskom struggles to keep the lights on. This R28m would be a capital expenditure outlay, which would pay for generators at three of Attacq’s malls.
“Ultimately we want all of our malls to have generators. When people lose power at home they often go to a mall and they go to the mall where they can see the lights are on so we want to be a benefit of that,” said the company’s COO, Jackie van Niekerk.