Attacq to dispose of non-core assets to reduce debt

By Roy Cokayne Time of article published Sep 12, 2018

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PRETORIA – Attacq, the listed real estate investment trust (Reit), is planning to dispose of its non-core property assets to reduce its interest-bearing debt and roll out its development pipeline at Waterfall in Midrand.

Jackie van Niekerk, the chief operating officer of Attacq, said they planned to dispose of the Eglin Building in Sunninghill, which was PwC’s head office before it moved into new premises at Waterfall, and the Brooklyn Bridge Office Park in Pretoria.

Van Niekerk said both properties were held for sale after offers to acquire them did not materialise. “These are the types of assets we are recycling. The book value of those two assets is close to R800 million,” she said.

Melt Hamman, the chief executive of Attacq, said Attacq was a capital growth fund and from a regulatory perspective had converted to a Reit at the end of May. However, Hamman said Attacq was not yet a fully-fledged Reit, because its interest cover ratio was still too high and the lowest of all the Reits. 

He said the reduction of Attacq's interest cover ratio was a focus for the company's management, which would be achieved through the disposal of assets that were not generating a cash return.

Hamman said they believed they had done exceptionally well in the year to June by increasing Attacq’s interest cover ratio to 1.6 times from 1.12 times in the previous year by recycling capital or disposing of assets.

He said about R500m had been generated to reduce Attacq’s interest-bearing debt through the disposal of the Mall of Namibia, the Nova Eventis regional shopping centre in Leipzig in Germany and its investment in Artisan in the UK.

This followed Attacq recycling almost R3.5 billion in assets between its 2016 and 2017 financial years.

Attacq yesterday declared a maiden dividend a share of 74 cents for the year to June, which was in line with its 73c forecast. Attacq’s R21.1bn South African portfolio delivered the majority of its distributable earnings in the year, followed by the dividends received from listed MAS, which provides exposure to property in Western Europe and Central and Eastern Europe.

Rental income increased to R2bn from R1.9bn. Van Niekerk said total vacancies seemed high at 7.8 percent, but effective vacancies year to date were at 5.1 percent.

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