Attacq pre-close update

Property fund Attacq has released a pre-close update presentation. This is a way to bring the market up to speed with how the fund has performed in recent months, with the current financial period closing at the end of June. Hence, a “pre-close” update.

I always appreciate and applaud any efforts by companies to go above and beyond minimum disclosure requirements to investors. I must also note that I am a shareholder in Attacq.

Gross interest-bearing debt has decreased since December 2021, reducing from R8.6 billion to R8.1 billion. The gearing percentage (net debt as a percentage of assets, with some adjustments) has stayed at 38%.

Attacq has applied the marketing brush to the names it uses for different types of properties. You’ll shortly see what I mean.

Collaboration hubs (what everyone else would just call office properties) saw vacancies improve slightly since December, with occupancy at 82.9% vs. 82.7%. I was quite surprised to note that the Waterfall City offices have a lower occupancy rate than offices in the rest of South Africa (81.8% vs. 85.7% respectively).

“Retail-experience hub” (shopping centre) occupancies also increased slightly from 96.2% to 96.4%. The logistics and hotel properties are fully let.

Trading densities in certain malls have grown significantly year-on-year. Trading density is a measure of tenant turnover divided by gross lettable area. Mall of Africa trading density grew 18.1%, Garden Route Mall grew by 13.3% and Eikestad Mall is 12.2% higher. Other malls have only managed low single digits.

From a dividend perspective, Attacq wants to retain its REIT status and needs to declare a dividend by the end of October to do so.

Beyond the rental income and related dividends, Attacq has numerous developments underway. Recently completed developments include the Cotton On head office and distribution centre as well as a Courtyard Hotel in Waterfall. A corporate campus, data centre, distribution centre and residential tower are all under development.

Attacq plans to hang on to its 6.46% stake in MAS Real Estate, giving strategic exposure to European property. Retail assets in the rest of Africa are considered non-core and will be disposed of.

The share price is down around 17% this year and is volatile between R6 and R8 a share, with a clearly visible trading range that creates great opportunities for swing traders. It’s just a pity that the stock is quite illiquid with a wide spread.