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The real estate investment trust (REIT) Attacq has published its financial results for the year ended in June 2020, presenting a “satisfactory” performance for the year, despite the obstacles presented by the Covid-19 pandemic and the national closure.
Attacq has a diverse property portfolio that includes the retail, hotel, office, mixed-use and light industrial sectors.
The group said its 2020 financial year can be split between before and during Covid-19, which ends in June 2020.
Attacq released its interim results on March 3, 2020, which thus far saw the company on track to meet the upper limit of its distributable guidance for the full year ending June 2020.
“Taking into account the challenges the group faced during Covid-19, the South African portfolio performed satisfactorily with net income from real estate operations, excluding the adjustment of International Financial Reporting Standards (IFRS) for linear leasing and net proceeds from the sale of sectional title units, increasing by 10.1% to R1.4 billion “.
On a like-for-like basis, net profit from real estate operations increased 4.2%, before accounting for Covid-19-related rental discounts.
However, due to complications from the Covid-19 crisis, major distributable earnings per share decreased 10.5% to 73.1 cents per share, while NAV per share decreased 25.8% to R16.45.
The group said its local portfolio valuations fell 8.6% on a like-for-like basis.
Rental income increased 7.4% to R2.2 billion after taking into account rental discounts of R102.9 million. The general occupancy rate decreased marginally from 93.8% as of June 30, 2019 to 93.6% as of June 30, 2020.
Attacq declared an interim dividend of 45 cents, but a final dividend was not delivered in line with most of the listed companies that have chosen to keep the cash.
Developments
Despite the challenges presented in 2020, Attacq noted that its major developments are still progressing, especially in Waterfall City. During the financial year, eight buildings were completed in Waterfall with another four buildings under construction.
Attacq said that developments at the Waterfall precinct progressed according to expectations during the year, despite the temporary closure of construction sites during the shutdown.
The total asset value of developments in Waterfall, including joint headquarters Attacq Sanlam (Waterfall Junction), decreased to R1.7 billion (2019: R2.3 billion). The reduction is due to the completion of all eight developments, as well as lower levels of development activity, the group said.
The group’s gross asset value of the entire existing South African portfolio is R20.4 billion (2019: R20.5 billion).
R1.2 billion was completed in developments at Waterfall, including:
- Deloitte Headquarters (Q4 Fy20)
- The Ingress 2 Building (Q3 Fy20)
- The Ingress PSG Wealth (Q1 Fy20)
- Waterfall Corporate Campus (Q3 Fy20)
- Waterfall Point 1 Building (Inventory)
- Waterfall Point Building 2 (Q2 FY20)
- Waterfall Point 3 Building (Inventory)
- Waterfall Point Building 4 (Q2 FY20)
There are four other developments in the pipeline, as well as some ongoing developments at The Ingress.
Waterfall Corporate Campus
Waterfall Corporate Campus is a 50/50 joint venture with Zenprop Property and its subsidiaries. Four (21,882 square meters) of the seven office buildings and the centrally located common facility including a conference room and restaurant were completed.
The estimated total primary gross leasable area (PGLA) for this development is 35,000 square meters, with a total development cost of approximately R880 million.
Attacq said construction on a speculative basis for the fifth building is progressing well and is expected to be completed in the third quarter of 2021 with leasing negotiations underway for 100% of the space. The remaining two buildings will be developed in stages, according to market demand.
Nexus waterfall
Nexus Waterfall comprises three office buildings and a “new concept” four-star Courtyard Hotel, which is leased and operated by City Lodge Hotels Limited for 15 years.
The total PGLA of the campus is estimated at 32,000 square meters at an estimated total development cost of R925 million. Construction of the 10-story, 168-key hotel has started at a development cost of approximately R1.3 million per key and is expected to be completed in the second quarter of 2021.
Construction of the three office buildings will be carried out in phases, subject to market demand, and building one will be negotiated on a lease basis.
Elipse waterfall
Ellipse Waterfall, located at a main city entrance site across from the Mall of Africa, is a 50/50 joint venture with Portstone Development.
This development is the first high-rise residential development in Waterfall City, named after celebrated astronomers: Newton, Kepler, Cassini and Galileo.
Construction of Phase 1 is expected to be completed in the first quarter of 2022. The development has sold over 75% (based on bankable sales) of the 269 apartments in Newton and Kepler towers (Phase 1).
In Phase 2, Cassini tower (± 180 units) more than 20% (based on bankable sales) have been achieved to date. Phase 3, the Galileo tower (± 150 units) is in the early design phases.
Warehouse midi 4
At the end of the year, a 4,757 m2 midi warehouse was being built that included an office component. The building design is based on the complete midi unit scheme within the same plot of land. Practical completion was achieved in the first quarter of fiscal year 21.
The Ingress
The Ingress is a five-building office park located prominently at the entrance to Waterfall City. Phase 1 consists of offices for PSG Wealth, which took over on August 1, 2019, as well as a speculative building that is 10% rented with the balance of 3,937 m2 under negotiation.
The remaining three buildings (approximately 11,700 square meters) will be developed in stages, subject to market demand.
Waterfall crossing
Attacq, through a joint venture between Sanlam Life Insurance Limited, has access to an additional 686,054 square meters of developable industrial volume.
The group has been appointed as the development, property and asset manager for the joint venture.
The Waterfall Junction development has been triggered with the design and startup of a bulk water pipeline, as well as roads and other infrastructure. This infrastructure project will unlock development for years to come, he said.
Read: Waterfall City developments exceed R2.4 billion, including a massive new warehouse for Nespresso
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