Attacq’s Waterfall developments start to pay off
Real estate investment trust ups its full-year dividend 10% for the year to end-June, boosted by revenue from Waterfall City
Attacq, the largest landlord in SA’s fastest-growing node Waterfall City, says its Mall of Africa and investments in Europe will continue to drive income growth as it begins to reward investors who backed it when it listed six years ago.
The group, which is paying dividends since converting to a real estate investment trust, delivered 10.1% dividend growth in the year to June 2019, which was ahead of its guidance of between 7.5% and 9.5% and superior to its peers, who have averaged around 2%.
Attacq also said it expected to grow its dividend between 8% and 10% in the year to June 2020, despite having to exit failed investments in Africa and its involvement in the bailout of Edcon, which entailed landlords buying stakes in the retailer or reducing its rent.
CEO Melt Hamman said Attacq’s distributable earnings increased 17.1% to R664.1m in the reporting period.
Included in the distributable earnings was R89.5m of cash interest received from shareholder loans advanced to AttAfrica, a company in which Attacq is a shareholder.
Adjusting for this nonrecurring item, distributable earnings grew 10.4%.
Attacq’s SA operational portfolio consists of retail, office and mixed-use, light industrial and hotel properties. During the reporting period, the distributable earnings from the SA portfolio increased 9.1% to 59c per share. The value of the existing SA portfolio was R20.5bn.
Hamman said Attacq’s aggressive rollout of developments in the Waterfall node was paying off.
Mall of Africa’s trading density rose 13.1% in the reporting period, a standout performer compared with other regional shopping centres of a similar size. Mall of Africa is 131,000m², the equivalent of 16 football fields.
Attacq is also a 22.8% shareholder in MAS Real Estate, which owns assets in western and eastern Europe. MAS has said it will grow its dividend at least 30% a year for the next three years. This strong growth path will boost Attacq’s income received.
Hamman said Attacq was making good progress in exiting its R800m worth of investments in the rest of Africa.
Peter Clark, a portfolio manager at Investec Asset Management, said Attacq had “produced a good set of results in the face of significant local headwinds”.
He said while gearing had increased over the reporting period to just over 37%, Attacq’s offshore borrowings remained significantly lower than peers and the company continued to increase its interest coverage ratio as non-income-producing assets started to contribute to earnings.