Real estate developer Attacq and the Government Employees Pension Fund (GEPF) have concluded a nonbinding term sheet that will result in the GEPF acquiring a 30% interest in Attacq’s AWIC subsidiary, which holds the completed real estate portfolio and development and leasehold rights in Waterfall City, in Johannesburg, for up to R2.39-billion.
Attacq states that Waterfall City represents an exceptional diversified investment and development opportunity, offering a “work, play, live” lifestyle within a smart, safe and sustainable environment.
If implemented, the proposed transaction will make a transformative contribution to furthering Attacq’s strategic objectives. The first objective includes introducing a long-term investment partner to AWIC, securing funding for its ongoing Waterfall City development rollout.
This comes in addition to optimising AWIC and the Attacq Group’s capital infrastructure by improving debt metrics and investment capacity, and enhancing the liquidity position of the Attacq Group.
Attacq intends on using the proceeds of the proposed transaction to settle R2.2-million of debt in AWIC and R500-milllion of debt in the rest of the Attacq Group.
That will result in a decrease in the Attacq Group’s gearing from 38% as at December 31, 2022, to 26.3% on a pro forma basis.
Attacq is also in the process of engaging with its debt providers to refinance the remaining debt in the Attacq Group on more beneficial terms.
A rebalanced overall capital structure – consisting of a deleveraged Attacq Group balance sheet with a lower cost of debt – will afford Attacq increased investment capacity to fund future developments.
Attacq will also be favourably positioned to optimise potential returns on capital deployed by the company in funding developments.
The proposed transaction will be accretive from an Attacq distributable income perspective, given the impact of lower interest rates associated with the repayment of debt and the refinancing of the remaining Attacq Group debt, and the additional fee income earned by Attacq.
If the proposed transaction is concluded, Attacq will hold a 70% stake in AWIC and the GEPF 30%.
Attacq and the GEPF will also advance shareholder loans to AWIC, with Attacq advancing an additional loan of R700-million and the GEPF advancing an additional loan of R300-million.