Capital growth property company Attacq, which will list on the main board of the JSE on October 14, has posted a 15.5% increase in rental income for continuing operations for the year ended June 30, but has conceded that this rental figure, as well as the group’s yearly property expenses, are distorted as a result of discontinued operations being excluded and reflected separately.

The company reported on Monday that general property expenses increased by 19.5%, with the above consumer price index increase in expenses driven primarily by higher municipal costs and an increase in bad debt provisions.

Direct property expenses, excluding municipal costs and bad debt provisions, increased by less than 7%. 

During the year, Attacq, which manages a diversified portfolio of property assets valued at over R13.35-billion, disposed of three properties, as well as 50% of its interest in Newlands-based property Great Westerford for a total of R458-million, realising a combined profit of R12-million. 

At year-end, five properties valued at a combined R1.03-billion were classified as assets held for sale, while three of these were disposed of subsequent to year-end.

Also included in assets held for sale at the end of the financial year was R534-million relating to Attacq's 50% equity holding in Arctospark and R35-million relating to the company’s 20% equity holding in and loan to Artisan Investment Projects 10.

VACANCIES

The property group further reported that good progress had been made in managing vacancies across the company’s portfolio, particularly given the challenging economic environment.

Retail vacancies were below market norms at 1.5% in 2013, having dropped from 1.9% the prior year, while office vacancies – at 5.7% – continued to be problematic, particularly in the Western Cape office portfolio.

“However, the majority of these vacancies relate to properties held for sale, and office vacancy levels in 2013 for continuing operations were less than 1.5%, which is below industry norms,” noted the company, which had a total portfolio vacancy rate of 7.3%.

DEVELOPMENT PROPERTY

Meanwhile, during the 2013 financial year, two properties under development were brought into operation; the 4 471 m² Altech building and the 35 671 m² Massbuild Distribution Centre, both situated in Attacq's flagship Waterfall development, in Midrand.

“In addition, construction started on a number of projects during the 2013 financial year, the majority of which will come into operation during the 2014 financial year,” the group said.

Meanwhile, Attacq planned to invest R250-million in its 32.5%-owned Mauritius-based developer Atterbury Africa along with investment partner Hyprop Investments, which had committed to investing R750-million.

At year-end, R112-million of Attacq's initial R250-million commitment had been invested.

PROSPECTS

Looking ahead, the property developer would continue to focus on developing and managing its portfolio of retail, office, mixed-use and light industrial properties, with a particular focus on its flagship Waterfall development.

In addition, it would look to drive its geographical diversification strategy of investing in high-quality shopping centres and developments in Africa, facilitated by its Johannesburg listing.