Property group Attacq has warned about the effect of greater spending on diesel and running generators for longer despite being ahead of its projected financial performance at the halfway stage of its 2023 financial year.
Distributable income of the company, valued at R6.5bn on the JSE, rose 27.2% year on year, or 35.9c per share, because of higher rental income from newly completed developments and the existing portfolio, mobile operator Cell C settling its arrears in cash, and lower finance costs in the six months to end-December.
Tough economic conditions squeezing disposable income of consumers did not seem to affect Attacq just yet as the Mall of Africa owner saw a 14.7% rise in its trading density, calculated by dividing the total sales revenue by the total floor space, to R3,627m².
The trading densities of apparel, department stores and food, which together account for more than half of total turnover, grew 24.5%, 9% and 18% respectively.
“Interestingly enough, it doesn’t really align yet with the interest rate cycle we are in. Potentially there could be a delay in [its] impact,” Attacq’s asset management executive Michael Clampett said in an interview with Business Day.
Attacq is a JSE-listed 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 JSE-listed MAS Real Estate.
But Clampett noted in the results presentation that Attacq spent R27m on diesel in the reporting period and had to burn more diesel to achieve this growth, particularly in its retail portfolio. The amount of diesel bought in the reporting period rose more than eightfold (713.6%) to 801,940l, as SA suffered record-high load-shedding in 2022.
CEO Jackie van Niekerk said: “We are really concerned about the diesel and the amount of diesel we will be utilising over the next six months.”
To cut down on the use of generators, Attacq has started retrofitting lights, installing generator management systems, adding renewable energy and increasing backup batteries.
An interim dividend of 29c per share was declared.
Waterfall City, which generated 58.5% of distributable income, remained Attacq’s crown jewel as its distributable income rose 50% to R148m.
In terms of cash flow, the cash generated from operations was 4.2% lower at R351.2m, and cash and cash equivalents nearly a third at R655.5m.
The occupancy rate for the portfolio at the end of the reporting period was 0.1 percentage point lower at 92%.
The company announced in February that it will team 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 in AWIC as a shareholder loan. AWIC is a wholly owned subsidiary of Attacq and the owner of Waterfall City.
The transaction requires majority shareholder approval and is subject to the fulfilment of certain conditions, but Van Niekerk told Business Day they hope to wrap this up before the end of June 2023.
With Denise Mhlanga
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