Attacq has teamed up with the Public Investment Corporation (PIC) to fund a R2.8bn Waterfall City development pipeline in a deal that hands the Government Employees Pension Fund (GEPF) a substantial stake.
The GEPF, on whose behalf the PIC invests more than R2.5-trillion in government employee assets, will acquire a 30% stake in the ordinary shares and shareholder loans held in Attacq Waterfall Investment Company (AWIC) for about R2.5bn and R300m into AWIC as a shareholder loan. AWIC is a wholly owned subsidiary of Attacq and the owner of Waterfall City.
In reaction, shares in Attacq skyrocketed beyond 20%, before giving up some of the gains to close 15.4% higher at R8.24.
The transaction requires majority shareholder approval and is subject to the fulfilment of certain conditions.
“This partnership is beneficial to both parties as it marries capital investment and quality real estate,” said Attacq CEO Jackie van Niekerk.
The bulk of the funds have been allocated to the Waterfall City precinct to roll out pipeline developments including the landmark logistics hub at Waterfall Junction being developed in a joint venture partnership with Sanlam Properties.
Attacq is a real estate investment trust (Reit) with a diversified property portfolio that comprises the mixed-use Waterfall City precinct, Lynnwood Bridge in Pretoria, MooiRivier Mall in Potchefstroom and Eikestad Mall in Stellenbosch. It also has investments in Central and Eastern Europe through its 6% investments in JSE-listed MAS Real Estate. MAS provides the company with diversification and income yields north of 8%.
Van Niekerk said to reduce capital investments, Attacq has gone into the joint ventures for the development of Waterfall City. To date, completed joint venture projects include Waterfall Corporate Campus with Zenprop, Cotton On head office and distribution centre with JSE-listed Equites Property Fund and Vantage data centre with Vantage.
The precinct has nearly 40,000m2 of bulk under construction, including the Ellipse Waterfall, a residential development with Tricolt as well as the Plumblink head office and distribution centre with Bidvest Properties.
Attacq CFO Raj Nana said some of the funds have been allocated to Waterfall City to pay down debt, which will reduce the group’s loan-to-value (LTV) — a key measure of the financial health of a property company — from 37.2% to 24%.
Nana said the transaction enables Attacq to create balance sheet capacity for additional debt when needed and reduce interest costs, thus enhancing returns for shareholders.
“Though the sector faced economic headwinds due to the Covid-19 pandemic, this transaction is proof that there is capital chasing quality real estate assets along with a strong management team,” said Nana. Waterfall City is an established locality and one of SA’s fastest-growing work-live-play lifestyle precincts.
Van Niekerk said Waterfall City is seeing demand from pharmaceutical and technology companies as well as logistics operators seeking centrally located logistics facilities. The return to the office and persistent load-shedding have caused an uptick in demand for office space.
“We remain bullish on the smaller logistics sector and we will continue to capitalise on this demand to roll out the development pipeline,” said Van Niekerk.
Updated: February 13 2023
This story has been updated with new information throughout.
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