JSE-listed capital growth property fund Attacq’s super-regional mall, the Mall of Africa, in Midrand, with a value of R4.9-billion upon completion, is fully tenanted and remains on track to open on April 28, which the company considers a strategic key milestone.
Attacq CEO Morné Wilken reiterated that the 131 000 m2 Mall of Africa – South Africa’s biggest single-phase mall development – was the largest project and the anchor development within Waterfall City and “is destined to soon be a real retail draw card for Waterfall”.
“The opening of the Mall of Africa . . . will be a true tipping point for Waterfall City and the catalyst for further development,” Wilken said, telling Engineering News Online that significant benefits, such as higher property demand, would only be seen after the opening of the mall.
The company’s conservative estimates indicated that about 15-million people a year would visit the mall, which is strategically located near the N1 highway.
“The Waterfall node continues to strengthen, with six new properties being completed during the six months to December 31, adding 23 398 m2 GLA to the portfolio,” Wilken said.
Waterfall City had a further 663 815 m2 of bulk available for development.
Attacq was in discussion with developers to effect additional joint venture partnerships in Waterfall, and remained focused on construction of about 212 000 m2 of developments, including the new 45 000 m2 head office for financial services firm PwC.
The company’s South African portfolio included Waterfall Business Estate, in Midrand‚ the Garden Route Mall, in George, and the Eikestad Precint, in Stellenbosch, as well as a 25% share in Brooklyn Mall, in Pretoria.
In addition to optimising its growing R12.4-billion portfolio of operational properties and delivering on its Waterfall pipeline, Attacq remained on the lookout for other growth opportunities in South Africa, Wilken said.
Attacq CFO Melt Hamman added that the company’s creative approach to local and international real estate investments positioned the capital growth fund well to deliver excellent returns as part of its long-term investment commitment.
Attacq’s total asset value increased by 32.4% to R27.1-billion in the six months to December 31, compared with R23.3-billion as at June 30, while the net rental income increased by 25.5% to R531-million for the six months ended December 31.
The company’s international assets had increased by 72.8%, to R6.4-billion.
Its net asset value per share increased by 24.5% year-on-year to R19.33.
At December 2015, 24% of the company’s total growth assets were in international hard currency, predominantly dollars and euros.
Attacq’s operating profit more than doubled to R979.2-million, while headline earnings a share increased to 53.9c.
“The Attacq properties and investments are geographically diverse assets across Africa. Clearly our strategy is proving to be sound, as our results illustrate. The mix between investing in developing and established hard currency markets stand us in good stead,” stated Wilken.
Wilken and Hamman agreed that there were inherent risks and challenges to overcome in the current regional and global economic climate, while, in smaller economies, the indexing of rental in hard currency and tenant migration resulted in risk in such markets.
However, diversification could hold the solution in pressured times, with the company’s blended investments in established and developing markets providing mitigation against such risks, Hamman believed.
Attacq would, therefore, pursue further diversification into European markets through its well-performing MAS investment and similar opportunities.
Internationally, Attacq has invested in new markets in Cyprus and Serbia, which complemented its existing Western European exposure through MAS.
The Cyprus asset portfolio included completed buildings, the 27 000 m2 Mall of Cyprus and a 20 000 m2 Ikea store, as well as the 13 600 m2 Engomi Mall, in Nicosia. Attacq aimed to expand the Mall of Cyprus by about 6 500 m2, and the Mall of Engomi by 1 300 m2, with the company still in the planning phase for the extensions.
The Serbia portfolio comprised five completed and operational retail properties, while the company, with a local partner had raised a further €40-million in equity for additional new developments in Serbia and its surrounds.
Significant market advantages in Central and Eastern Europe included stability, a rand hedge, as well as lower debt rates, which could result in a capital rate compression in future, owing to significant demand in these markets, Wilken suggested, adding that this could result in a value uplift in the market.
Since the short to medium term outlook in sub-Saharan Africa had weakened significantly owing to a strong dollar, depressed commodity prices and a lack of stability in power supply, Attacq would focus on delivering the Kumasi City Mall, in Ghana, by April 2017, as well as focus on active asset management of existing assets through the cycle.
The dominant malls in the Attacq portfolio, the Manda Hill Mall, in Zambia, the Ikeja City Mall, in Nigeria, and Accra Mall, in Ghana, nevertheless had defensive qualities and continued to trade relatively well given the more challenging operating environment, Wilken concluded.