Attacq raises full-year guidance following the GEPF and MAS deals

Published Mar 13, 2024


Attacq, the JSE-listed REIT and development partner in Waterfall City that reported a 2.8% rise in interim distributable income growth per share to 36.9 cents yesterday, has raised its full-year distribution growth guidance.

An interim dividend of 30c per share was declared, equating to a payout ratio of 81.1%.

“For the full year, we have revised our DIPS (distributable income per share) growth guidance upward to between 10% and 12.5% (from 8% to 10% previously). This also considers the disposal of the shares in MAS that will be invested in income-generating activities in the group,” Attacq’s chief financial officer. Raj Nana. said in a presentation yesterday.

“The portfolio is expected to continue to generate income growth and, given the current capital structure, prudent interest rate hedging, liquidity, and the MAS disposal, the group’s full-year DIPS guidance has been revised upwards to between 10% and 12.5% growth with a payout ratio of 80%,” the group said in a statement.

Gearing had fallen significantly to 25.3% by the end of the interim period from 37.3%, following the R2.7-billion Waterfall City transaction in October 2023, when the Government Employee Pension Fund (GEPF) acquired 30% of Attacq Waterfall Investment (AWIC).

Another deal announced yesterday was the disposal by Attacq of its remaining stake in central and eastern Europe focused property company MAS Plc, for about R773 million, a decision taken in line with Attacq’s capital allocation framework over its assets of which it has significant influence over.

“The introduction of a long-term strategic shareholder to AWIC and makes substantial capital available for the continued development roll-out of Waterfall City,” the group said in its results.

Attacq CEO Jackie van Niekerk said MAS was a “great company”, but it recently decided not to declare a dividend, and Attacq had no control over dividend decisions.

“We don’t want to invest in assets where we don’t have control, that goes for all future capital allocations,” she said. She did not rule out future offshore investments.

The impact of the GEPF transaction was only included for the final two months of the six-month period, and would have a larger impact on the full-year results to June 30, 2024.

Van Niekerk said it had been “an excellent half-year”, closing out key transactions to ensure a sustainable capital structure. She said their diverse precinct strategy continued to be well executed, with high occupancy and collection rates of 93.7% and 99.7%, respectively.

The flagship residential development Ellipse reported good sales, with 87.7% bankable sales. The office assets attracted clients including iconic brands such as DP World, Eppendorf, Dell, Estée Lauder, Pfizer, Ericsson, Dimension Data and Accenture.

Attacq’s rental income grew by 9.6% to R1.3bn. Finance costs fell 4.1% compared to the prior period while NOI (net operating income) growth from property operations grew by 6.4%.

Looking ahead, she said South Africa faced several headwinds -including energy and water disruptions and shortages, low business confidence, political uncertainty and high inflation and interest rates - all of which were likely to constrain economic growth and, as a consequence, the real estate market in general.

She said Attacq’s strategy, however, was proving resilient in these challenging conditions, and the GEPF transaction had strengthened the capital structure which was assisting in mitigating the impact of the headwinds.