Attacq, the listed Real Estate Investment Trust (REIT) developing Waterfall City, says it added five buildings over the past financial year to the eight it completed in 2020.
Located in-between Centurion and Sandton, the mega-development forms part Midrand which falls under the City of Johannesburg Metropolitan.
In a report on its financial results for the year ended June 2021, Attacq said a further five buildings are under construction representing a total of 47,930 square metres (sqm).
The group said that total distributable income decreased by 35.9% to 46.8 cents per share. Notwithstanding difficult trading conditions, the Waterfall City and the Rest of South Africa portfolios delivered strong performances.
The distributable income from Waterfall City increased by 30.6% to 33.3 cents per share (2020: 25.5cps), mainly as a result of rental income earned from newly completed developments and lower rental discounts compared to the prior fiscal year.
Distributable income from South African operations increased by 22.5%, as the group reported a local real estate portfolio rental collection rate of 101.5%, while occupancy levels improved to 95.2%.
Attacq’s South African real estate portfolio consists of retail-experience hubs (retail), collaboration hubs (office and mixed-use), logistics hubs (light industrial), and hotels.
Attacq chief executive officer, Jackie van Niekerk, said: “It’s been another year of flux for the real estate sector in South Africa – and across the globe. The Covid-19 pandemic continues to impact businesses and people alike, bringing with it a need for flexibility, forward-thinking and the imperative to understand client and customer challenges more deeply than ever before.”
While group distributable income was reduced by 35.9% and no dividend has been declared for the 2021 financial year, the portfolio performed well against market expectations, it said.
Like-for-like rental income decreased by 0.5% (2020: decreased 4.8%); property expenses, excluding the cost of sales of sectional-title units, decreased by 1.5% (2020: increased 2.6%) to R757.0 million (2020: R768.7 million); and net operating income on a like-for-like basis increased by 1.4% (2020: increased 4.2%).
Attacq said that the completed portfolio maintained high collection rates and occupancy levels despite lockdown restrictions, and new high-quality clients were successfully secured for Waterfall City.
Consumer behaviour change
Attacq said its strong South African performance ensures it is well placed to weather an environment still being disrupted by the pandemic, technology innovations and shifting customer behaviours.
“These innovations are something the company has been tracking closely for many years, using data to inform investment, product and innovation decisions as it seeks to leverage the intersect between technology and people. With lockdown accelerating the shift by shoppers from in-store transaction-focused behaviour to online shopping.”
Property value
The value of Attacq’s portfolio at Waterfall City declined 4.8% over the reporting period, to R11.1 billion. “Following the success of Ellipse Waterfall, Attacq is expanding the residential offering of Waterfall City by launching its latest residential development, The Mix,” it said.
The Mix residential development was launched on 3 July 2021. Attacq has partnered on a 50/50 joint venture with D2E Properties Proprietary Limited to develop a 14-storey, 391 apartment offering which will be situated adjacent to the Mall of Africa.
The sales of this innovative and affordable development, with apartment prices starting from R999,000, is exceeding expectations, having achieved over R115 million in pre-sales to date, the group said.
Attacq said it continued to invest in infrastructure in Waterfall City to unlock future development sites during the course of the year. “Further enhancement is continuing including a new electrical substation to increase electricity supply to the logistics hub, enabling further diversification investment in light industrial uses.”
Ellipse Waterfall, located on a prime city gateway site opposite the Mall of Africa, is a joint venture with Portstone Development Proprietary Limited (Portstone). Ellipse Waterfall comprises four deluxe high-rise towers, named after celebrated astronomers: Newton, Kepler, Cassini and Galileo.
The construction of Newton and Kepler towers (Phase 1), a 50/50 undivided interest with Portstone, comprising 269 units, has been completed with more than 83% of the units having been sold.
Transfer of the first 196 units took place post-year-end, with a further 27 units pending transfer. In excess of 60% of bankable pre-sales have been achieved in Phase 2, Cassini tower (± 180 units) to date.
Phase 3, Galileo tower (± 170 units) is in the early phases of design, the development group said.
New clients
Attacq said that Waterfall City continues to attract quality clients, resulting in a total 38,087 sqm effective gross lettable area of new developments underway since year-end.
This included Vantage’s new data centre (11,785 sqm) and Cotton On’s head office and distribution centre (20,786 sqm).
Mall of Africa
Attacq said that The Mall of Africa completed its first five-year lease cycle at the end of April 2021 and management took the opportunity to optimise the tenant-mix by introducing 20 new brands, which included new-concept stores for HiFi Corporation and Clicks Baby, as well as Ted Baker, Hugo Red, and Nando’s, some of which were as a direct result of shopper requests.
“While partial lockdown restrictions have been eased, they continue to bring a level of uncertainty into the operating environment. In addition, it is the unknowns around the vaccination rollout and the timing of the opening of the economy that prolong the need to proceed with prudence,” the group said.
Accordingly, the board has resolved not to provide guidance for the financial year ending June 2022. “Attacq is, however, seeing signs of improvement in the real estate sector and specifically in their business drivers.”
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