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Attacq on track to deliver 2024 year-end dividend growth guidance

Attacq CEO Jackie van Niekerk

Attacq CEO Jackie van Niekerk

28th November 2023

By: Darren Parker

Creamer Media Contributing Editor Online

     

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Real estate investment trust Attacq is on track to deliver its 2024 financial year guidance for dividend a share growth of between 8% and 10%, CEO Jackie van Niekerk told investors at the company’s preclose update for the six months ending December 31.

This was owing to strong performance in both retail and office space, despite numerous macroeconomic, weather, societal and political challenges during the period.

Across Attacq's South African portfolio, the occupancy rate was set at 93.6% for the four months ended October, up from 92.5% in June. The company also noted that its collection rate had slightly dipped, coming down from 100.7% in June to 100.1% at the end of October.

Client retention rate also decreased from 82.2% in June to 57.6% in October. This was a result of 59 leases expiring, totalling 23 366 m2, with new clients adding 2 087 m2. New leases were also signed during the four months to October 31, totalling 11 179 m2.

Attacq noted that Black Friday had yielded a significant uptick in retail foot traffic, with Friday coming in at 9.6%, and Saturday at 5.2%, higher than the previous year. These changes were noted in Mall of Africa, Moyer River Mall, and Garden Route Mall. On the Black Friday weekend, the change from Friday to Saturday in 2022 was 0.9% up, while in 2023, this change was 5.5% up, which the company attributed to shoppers preferring to shop on weekends rather than weekdays owing to work commitments.

Water saved period-on-period between July and October was 6.9% higher, amounting to about 17.88-million litres.

In addition, Van Niekerk noted Attacq’s ongoing plans to add solar photovoltaic (PV) systems to its properties, with seven to nine systems planned, able to produce more than 2.5 MW. This is up from the planned total in June of 1.8 MW.

Van Niekerk said the company’s PV system rollout was on track, targeting a 25% off-grid solution by 2030.

She added that the company’s Smart Utility Hub was currently in development to fully digitalise the company's utility management systems.

Overall, Van Niekerk said that the company had successfully managed to deliver on its strategy during the period despite multiple challenges.

In particular, the company saw success in its strategy of developing and maintaining a precinct-focused South African portfolio, providing sustainable community spaces in established areas.

During the period, solid operational performance was achieved, with increased demand for the company's Collaboration Hub space offering, with Van Niekerk noting that demand for office space was on the rise once again after the dip experienced during the pandemic.

Particularly, retail trade remained strong within all Attacq's retail experience hubs. Van Niekerk said that the company had worked hard to improve on its resilience and efficiencies to combat numerous challenges experienced during the period, such as loadshedding, water outages, hailstorms and high interest rates.

Another part of the company's strategy that Van Niekerk explained was to develop Waterfall City into a smart, safe and sustainable city through various partnerships. She said that the developments in Waterfall City focused on increasing the company's rental properties, with new high-quality and multi-use assets becoming available.

Moreover, Attacq has now finalised the transaction to increase its stake in Waterfall Junction to 50%. Ultimately, the company aims to continue maintaining and building high-class infrastructure and urban design in Waterfall City.

Another part of Attacq’s strategy is to manage and optimise a sustainable capital structure. In this regard, Waterfall City has finally finalised its transaction with pension fund Government Employee Pension Fund and aims to successfully refinance its R6-billion debt.

Van Niekerk said Attacq’s strategic purview was to drive business diversification through the integration of environmental, social and governance, business innovation and technology.

Attacq’s Sook offering, which is a retail concept at the Mall of Africa designed to provide premium retail space for emerging and established retail brands to engage with customers and increase brand awareness, was successfully rolled out on October 1. The flexible rental model was a response to demand for space by smaller businesses and online retailers that require short-term leases and more flexibility.

Van Niekerk said that Sook met landlord objectives, who aimed to test and screen up-and-coming brands before committing to a full lease, thereby reducing leasing risk.

The Sook concept allows for daily, weekly or weekendly lease terms.

The Sook concept also aims to create hype and trend activity in retail experience hubs while tapping into social and online brands and facilitating product launches and non-retail activations.

From the retailer's perspective, Van Niekerk explained that their objectives were to access the Mall of Africa shopping base without the necessary capital expenditure required to add a shop. Sook allows them to have no permanent overheads and receive quick feedback on their physical retail strategy.

In addition, Attacq invested during the period in elevating its retail experience hubs through providing improved customer experiences, which Van Niekerk said contributed to the strong retail performance.

This involved the incorporation of more entertainment offerings at Mall of Africa, with the opening of Bounce and the Discovery Soccer Park. Additionally, House and Home reduced its space at MooiRiver Mall and introduced an @Home living space instead. Additionally, Waterfall City Park was one of the official fan parks for the 2023 Rugby World Cup during the period.

The Edgars space was also reduced at MooiRiver Mall, while a pedestrian ramp at the Eikestad Mall resulted in an increased turnover for the Checkers. A shooting range was added at Lynnwood Bridge, while at Garden Route Mall, the Toys‘R Us and Jet stores were swapped around to achieve optimal trading densities for both. At Lynnwood Bridge the health and beauty category were expanded.

Meanwhile, at Waterfall City, developments under construction totalled 33 257 m2, down from 36 706 m2 in June, while Ellipse Waterfall bankable sales in Phase 1 amounted to 97.8%, Phase 2 96.7%, with Phase 3 sitting at 51%.

At Waterfall Junction, there was an increase in shareholding that had been finalised. Moreover, development activity amounted to R1.5-billion, up from R1.3-billion in June. This comes to an estimated 49 906 m2 of development. This is comprised of three developments under construction, totalling R653.5-million, in addition to Investment Committee-approved developments not yet under construction totalling R828.1-million.

In terms of Attacq’s capital structure, its funding mix is currently made up of 40.4% from Nedbank, while 27.2% is funded through SBSA, 15.7% is from RMB, with 11.7% from Old Mutual, and the final 5% from Sanlam, totalling R6-billion as of October.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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