JSE-listed real estate investment trust (Reit) Attacq recorded a dividend a share of 81.5c for the financial year ended June 30, which is 10.1% higher year-on-year and exceeds its previously communicated market guidance.
Attacq’s distributable earnings a share increased by 17.1% year-on-year to R664.1-million.
Included in the distributable earnings is R89.5-million (2018: R46.7-million) of cash interest received from shareholder loans advanced to AttAfrica.
Adjusting for this nonrecurring item, distributable earnings grew by 10.4%.
Attacq’s performance continues to be underpinned by its quality South African portfolio, developments at Waterfall and its 22.8% shareholding in MAS Real Estate.
At a media briefing on Tuesday, Attacq CEO Melt Hamman highlighted that in a challenging operating environment characterised by a weak domestic economy, increased competition for capital, low business confidence and greater uncertainty, the quality South African portfolio performed well.
Attacq, which is driving the development of Waterfall City, completed seven buildings at Waterfall during the financial year under review. A further nine buildings are under construction.
The strong performance from Waterfall was reflected in the 13.1% increase in trading densities for the Mall of Africa, as well as the considerable interest from buyers for its first high-rise residential development, Ellipse Waterfall.
During the period, distributable earnings a share from the South African portfolio increased by 9.1% to 59c.
The value of the existing South African portfolio is R20.5-billion, compared with R20.9-billion in the prior financial year.
The portfolio’s weighted average lease expiry was 6.5 years at period end, compared with seven years at the end of the 2018 financial year.
The average growth in trading densities in the retail portfolio for the period under review was 6.8%, compared with 5.1% in the prior financial year.
Meanwhile, Mall of Africa’s trading density growth was 13.1% and its rent to sales ratio improved to 9.1%. Hamman highlighted that the Mall of Africa’s trading density was notable, given that it was a super-regional centre that has only been operating for three years.
During the period, developments under construction increased to R929.5-million from R527.6-million in the prior financial year.
Complementing the performance of the South African portfolio, was the contribution to distributable earnings a share of 26.9c, generated by Attacq’s investment in MAS.
MAS achieved a 59.6% increase in net rental income to €51.6-million and a 41.9% increase in distributable earnings a share from €0.06 to €0.09, driven by acquisitions of investment property and its real estate equity securities portfolio.
Meanwhile, during the financial year, AttAfrica successfully disposed of its interest in Achimota Retail Centre, in Ghana, reducing the value of Attacq’s Rest of Africa retail investments as a percentage of total assets to 3%.
Following the Manda Hill shopping centre disposal post year-end, this reduced to below 2%, excluding cash held by an Attacq subsidiary.
Attacq indicated that it would continue reducing its exposure to the Rest of Africa retail investments and will use the funds raised from disposals to reduce its debt or fund other developments.
Barring unforeseen circumstances and provided it is able to achieve its forecast rental income based on contractual terms and deliver on the expected Waterfall development roll-out, and if MAS realises its three-year dividend target, Attacq expects to deliver distribution a share growth of between 8% and 10% for the 2020 financial year.