JSE-listed real estate investment trust (Reit) Attacq reported a 34.1% increase in distributable income a share to 28.2c for the six months to December 31, 2021.

Distributable income excluded the profit earned from the sale of residential units, which added an additional 9.35c a share.

The company on March 22 said the growth in distributable income was mainly driven by the dividend received from its R46.1-million investment in JSE-listed property investor and operator MAS.

Speaking at the Reit’s results presentation in Waterfall, Midrand, Attacq CEO Jackie van Niekerk said the decision to retain a 6.5% holding in MAS after selling the rest of its stake over the past two years proved prudent as it delivered capital growth and dividend income for the reporting period. Attacq had divested most of its stake in MAS in an effort to reduce debt.

Attacq’s debt reduction strategy led to it lowering its gearing from 46.3% at the end of 2020 to 38% at the end of 2021. Attacq CFO Raj Nana explained that the improvement in gearing was attributable to a total interest-bearing borrowings decline of 15.4% to R8.6-billion, compared with R10.2-billion for the year before.

Attacq also reported that it had maintained its liquidity position of R1.8-billion owing to proceeds from disposals executed during the period to further reduce debt.

The Reit’s total assets decreased by 4.5% to R21.6-billion for the period, while total liabilities also decreased by 15.4% to R9.7-billion, compared with R11.5-billion for the period ended June 30, 2021. Nana said the respective changes were attributable to Attacq’s efforts to dispose of noncore assets.

“The last two years were about optimising our capital structure through debt reduction initiatives. Moreover, the progress made on executing the strategy in terms of the disposals yielded reduced interest-bearing debt and an improved net asset value,” he explained.

Van Niekerk noted that, in light of the ongoing global economic uncertainty, the board had elected to continue with its conservative approach to capital management, which it believed would contribute to ensuring long-term sustainability. As such, no interim dividend was declared.

OPERATIONS

“In terms of the operating environment, we are cautiously optimistic that recent green shoots are heralding a start to economic recovery, an encouraging sign for us and our stakeholders,” Van Niekerk said.

Attacq’s retail-experience hubs performed relatively well, reporting a 96.2% occupancy rate. In addition, year-on-year weighted average trading density grew by 8.7%, with the Reit’s Mall of Africa trading density increasing by 14.9%, Garden Route Mall increasing by 10% and Lynnwood Bridge retail increasing by 9%.

Van Niekerk said the increase in foot traffic and trading density indicated increased sales, pointing to a return to prepandemic 2019 levels.

Attacq’s collaboration hubs, which focus on space optimisation, convenience and space-as-a-service, were conceived of before the onset of Covid-19. However, the pandemic accelerated their relevance as clients sought flexible solutions to both space requirements and leases, Van Niekerk explained.

“This innovation saw Attacq improve office use rates towards the end of the previous calendar year, especially as businesses started implementing return-to-work policies and hybrid working models,” she noted.

Van Niekerk said trends such as online shopping, as well as work-from-home and hybrid working models had pushed the company to interact within the real estate sector in a different manner.

Attacq’s rental income was in line with the prior period at R1.1-billion, recording only a marginal decline of 0.7% year-on-year.

Property expenses, however, excluding the cost of sales of sectional-title units, increased by 14.8% to R433.5-million, compared with R377.8-million at the end of 2020.

Nana said this increase was mainly driven by bad debt write-offs, provision for bad debts and municipal charges. The net operating income decreased by 4.6% from the same period in the previous year.

During the period, the Corporate Campus Building 6 at Waterfall City was completed with a total gross lettable area of 3 970 m².

The precinct has another five developments under construction. These include 185 units in the luxury Ellipse Waterfall Cassini Tower, Nexus Waterfall Building 1, Waterfall Corporate Campus Building 7, Cotton On’s head office and distribution centres, and the first phase of the Vantage Data Centre.

Attacq also launched two residential developments, Ellipse and The Mix Waterfall.

“There is no doubt that the short to medium term will continue to be challenging, however, we will remain focused on delivering to our strategic imperatives,” Van Niekerk concluded.