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Attacq's momentum likely to slow, say valuers

Capital growth property fund Attacq's stellar run post-listing is facing some hurdles, with valuers expecting it to take longer to fill the vacancies at its big developments and making more conservative rental estimates. Attacq listed in October 2013 at R17. Yesterday, when the fund released results for the six months to December, its share price closed at R24.95, showing 47% growth since listing.
Attacq CEO Morné Wilken. Photographer: Arnold Pronto
Attacq CEO Morné Wilken. Photographer: Arnold Pronto

Attacq achieved 5.1% growth in net asset value per share (NAVPS) for the six months to 31 December. Total assets grew beyond the R20bn mark during the half-year, and net rental income increased 78% year on year. Attacq's asset growth has been steady, it having listed with R13.35bn worth of assets.

Attacq's properties were valued at about R14bn at the end of December last year. Its main asset, the Waterfall Estate development, accounted for most of that value. While the fund's performance has been impressive, independent valuers are beginning to view the group's prospects more conservatively.

"The valuers are now expecting it to take longer to fill vacancies and have lower rental expectations on some properties," Old Mutual Investment's listed property manager for the MacroSolutions boutique, Evan Robins, said yesterday.

Looking forward to significant future capital growth

CEO Morné Wilken said Attacq was nevertheless still primed for capital appreciation and higher growth over the long term, as its income-producing investment-asset base was being boosted by an extensive pipeline of developments. "We are investing significant funds in infrastructure, particularly at our flagship and game-changing Waterfall Estate mega development in Gauteng. Here, major projects, such as the Mall of Africa super-regional shopping centre, are set to be completed in 2016, and Attacq can look forward to significant future capital growth," he said.

During the 2014 calendar year, Attacq delivered 14 commercial developments, substantially boosting its investment properties and rental income streams. During the half-year, the group raised R640m in cash from shareholders to fund the acquisition of the Attacq Waterfall Investment Company's (Awic's) minority shareholding.

This made Attacq the sole shareholder of Awic, which owns the assets within Waterfall Estate. Atterbury Property Holdings is the developer of buildings and facilities within the estate. By becoming the sole shareholder of Awic, Attacq also secured a pre-emptive right in respect of all material developments undertaken by Atterbury Property.

In return for the preemptive right, Attacq cut its shareholding in Atterbury from 25% to 10% for a consideration of R83m. Funds with large development pipelines were under pressure to find tenants, said Grindrod Asset Management's chief investment officer, Ian Anderson. "We are also concerned about the prospects of companies with large development pipelines, given the sustained weak economic backdrop and lack of demand for space from tenants," he said.

Source: Business Day



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