Attacq delivers satisfactory results despite Covid-19 challenges

Attacq has reported that its South African portfolio performed satisfactorily with net profit from property operations increasing by 10.1 percent to R1.4 billion for the year ended 30 June 2020, despite Covid-19 challenges and IFRS adjustments. 

Diversification

The REIT group said that the diversified nature of the South African portfolio had resulted in the group not being overly exposed to any single sector: 

• Developments at Waterfall have a successful year, completing 42,751m² of primary gross lettable area, including the Deloitte head office. 
• The investment into the Rest of Africa portfolio remains non-core and is earmarked for disposal. 
• Negotiations for the disposal of Ikeja City Mall, Nigeria are well advanced. 
• The investment in MAS contributed R214.9 million towards core distributable earnings, an increase of 13.7 percent from the prior year. 

The net result of the financial performance of these four drivers is a decline in the group’s core distributable earnings of 10.5 percent to R514.2 million. 

Investment

Attacq said that the weak economic environment, exacerbated by the Covid-19 pandemic, has had a significant negative impact on asset valuations: 

• Investment property valuations in the South African portfolio declined due to the application of weaker valuation inputs. 
• The Rest of Africa retail investments had negative fair value adjustments in respect of their underlying properties and increased expected credit losses relating to the shareholder loans into these investments. 
• The group’s investment in MAS was impaired as a result of the decline in the MAS share price following the onset of Covid-19. 

The combined impact of these adjustments contributed to a 9.3 percent decline in total assets per share, and total liabilities per share were increased to 13.1 percent, largely due to drawdowns on development facilities and an increase in the negative market-to-market liabilities on the rate swaps. 

The group’s net asset value per share declined by 25.7 percent from R22.16 in 2019 to R16.45 in 2020. 

Dividends

According to the group, Attacq’s board has resolved not to pay a final dividend for the year ended June 2020 after taking into account the uncertain economic outlook, the need to preserve liquidity and in compliance with funding requirements. 

Despite this, Attacq says it has satisfied all REIT regulatory requirements, including the minimum 75 percent distribution set out in the JSE listing requirements.