JSE-listed real estate investment trust Attacq achieved a 34.2% year-on-year increase in distributable income to 62.8c for the financial year ended June 30 and has resumed dividend payouts at 50c a share – representing a payout ratio of 80%.

The developer of the Waterfall City, in Midrand, also recorded a trading profit of 9.7c a share on the sale of sectional title units. This was excluded from distributable income.

Attacq’s net asset value a share increased by 11% year-on-year to R17.49, while rental income for the year totalled R2.2-billion and like-for-like rental income increased by 2.5%.

The group’s property expenses, excluding cost of sales of sectional title units, increased by 8.6%, to R822.2-million, up from R757-million in the prior financial year, mainly as a result of an increase in expected credit losses and unrecoverable municipal charges on vacancies.

Property expenses increased by 8.8% on a like-for-like basis.

Attacq’s net profit from property operations, excluding the International Financial Reporting Standards adjustment for straight-line leasing and net proceeds from the sale of sectional title units, decreased by 6.9%, to R1.3-billion, down from the R1.4-billion of the 2021 financial year.

On a like-for-like basis, net operating income decreased by 0.7%, mainly as a result of additional repairs and maintenance expenses incurred on the retail-experience hub portfolio during the period.

Total assets decreased by 4.3% to R21.6-billion, down from the R22.6-billion of the prior period, while total liabilities decreased by 19% to R9.3-billion. This is mainly owing to the disposal of assets and the use of sale proceeds to reduce interest-bearing debt.

For the year, Attacq completed R997.6-million worth of developments in Waterfall City, totalling 47 623 m² of gross lettable area.

Attacq CEO Jackie van Niekerk says the company has emerged from disruptions caused by the Covid-19 pandemic with an improved company culture and capital structure.

In addition, the group also managed to improve its performance despite South Africa’s record unemployment levels and low-growth environment – a feat the group says is evidenced by the underlying quality of its portfolio, characterised by continued growth in the expanding mixed-use Waterfall City precinct.

Distributable income from Waterfall City accounted for R227.9-million, the rest of South Africa operations R146.13-million and other investments R68.57-million for the period under review.

As for occupation and revenue collection, Attacq had occupancy rates of 92.1% and collection rates of 97.8% during the period.

Gearing improved from 43.3% in the 2021 financial year, to 37.2% in the period under review, while interest cover improved from 1.41 times to 1.58 times.

CFO Raj Nana adds that, during the period, Attacq successfully de-geared its balance sheet, completed a number of developments and grew its distributable income.

“In addition, lower interest costs, higher rental collections and the receipt of a dividend from the investment in [JSE-listed real estate company] MAS have contributed to an increase in total distributable income per share of 34.2%.”

Going forward, Van Niekerk says Attacq’s focus is on new opportunities, mainly through the implementation of its environmental plan, in support of sustainable growth within its portfolio and the delivery of its purpose and vision.

“A key ingredient of success has been formulating and executing our ‘hub’ strategy, which focuses on creating segmented retail-experience, collaboration and logistics hubs that are smart, safe and sustainable,” she says.

Other achievements during the period include Attacq’s conclusion of an amended lease agreement on the 24 955 m² Cell C collaboration hub space, subject to the completion of Cell C’s recapitalisation. Also here, the 14 014 m² warehouse component of the Cell C campus was re-let at market-related rentals for a period of three years.

Looking forward, at a macro level, Attacq reports that a number of headwinds – including poor business confidence, high unemployment, rising inflation and interest rates – are likely to restrict economic growth.

Nonetheless, the group reports that its portfolio is expected to continue generating income growth, coupled with improved funding and liquidity positions, as a result of its improved capital structure.

In this regard, Attacq notes that its portfolio is diversified by geography, sector and asset class and, with its exposure to defensive, quality retail and residential, and complemented by premium-grade office developments, is well-positioned to grow further as consumers and businesses seek quality and convenience in their work, home and recreation destinations.

In line with this strategy, Attacq points out that its decision to discontinue its plans for The Mix residential development and its shifting of focus towards additional phases of the group’s flagship Ellipse Waterfall development, has borne fruit.

To date, Ellipse has sold more than R1-billion in units since launching in July 2021, with the first residents already having moved into the residential mixed-use hub.