JSE-listed real estate investment trust (Reit) Attacq on Tuesday announced an interim dividend of 40.5c a share for the six months ended December 31, 2018, which CEO Melt Hamman said was “within the company’s guidance”.
There is no prior period comparative for the interim dividend, as Attacq only converted to a Reit in May 2018.
For the 2019 financial year, however, the South Africa-based company is targeting dividend growth of between 7.5% and 9.5%.
Attacq’s distributable earnings a share increased by 9.5% to 45c a share, as a result of the completed developments generating additional income and growth in the dividend received from fellow Reit MAS Real Estate.
As a result of Attacq’s investment in MAS, Attacq received cash dividends of R97.3-million from MAS.
However, Attacq’s ‘Rest of Africa’ retail investments suffered a disappointing blow owing to challenging economic conditions, with the investment value declining as a result of a R370.2-million impairment.
Attacq has retail properties located in Ghana, Zambia and Nigeria.
Here, the company is expecting several South African tenants to withdraw over the course of the next year, as a result of macroeconomic conditions and moderate inflation, which results in instability for tenants, Attacq said during a media briefing on Tuesday.
Attacq’s net asset value per share (NAVPS) decreased by 2.3%, from R24.24 at June 30, 2018, to R23.66, largely owing to the full year dividend payout of R520-million in October 2018 and the impairment from the ‘Rest of Africa’ retail investments.
The company’s retail-dominated South African portfolio, which is valued at about R21-billion, saw rental escalations of 7.1%, and had a weighted average lease expiry profile of 6.8 years at the end of the reporting period.
Total rental income for the portfolio increased by 12.4% to R1-billion, largely as a result of the additional rental income from the buildings completed during the 2017 and 2018 financial years.
According to COO Jackie van Niekerk, Attacq’s South African portfolio is well positioned to deliver the majority of its distributable earnings in the foreseeable future.
“The strong average trading density increase of 6.9% exceeds the market average, with the largest contribution coming from our well-located flagship Mall of Africa, which had a 12.7% increase in trading density,” she elaborated.
Van Niekerk added that the mall continued to benefit from the densification of the overall Waterfall node, and that it would likely experience additional growth once the Ellipse residential development rolls out in the future.
Commenting on the Waterfall project, Hamman highlighted that the development pipeline includes the Waterfall Corporate Campus Office Park, the new Courtyard Hotel and the Ellipse residential development.
With the Mall of Africa, the Waterfall node and the upcoming Ellipse residential development, Attacq believes Waterfall City will become a “live, work and play” community.
Construction on the Ellipse development is expected to start in the fourth quarter of this year.
Meanwhile, overall portfolio vacancies decreased to 5%, mainly owing to the securing of the Dis-Chem lease for Attacq’s industrial warehouse and leases concluded at Gateway West with Sage and Spaces.
Subsequent to the period end, vacancies have since reduced to 4.6%.
“We have worked hard to reduce vacancies by securing new tenants,” Van Niekerk noted, explaining that this was achieved by adopting a proactive and solution-driven approach that assists in mitigating future risk in the changing property sphere.
Attacq also said on Tuesday that it would be participating in fashion retailer Edcon’s newly announced recapitalisation programme, with Attacq’s effective South African Edcon exposure to settle at 22 945 m² of primary gross lettable area (PGLA) by October 1, 2019.
Through the programme, Attacq is expecting a gross monthly rental of R3.2-million and a total PGLA exposure of an estimated 3%. Unfortunately, the company’s involvement in Edcon’s recapitalisation programme will negatively impact on its 2019 financial year distributable earnings by R4.1-million.
This, Hamman said, falls in line with Attacq’s strategic objectives of investing further capital into the South African portfolio and Waterfall developments.