Release Date: March 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Attacq Ltd (JSE:ATT, Financial) declared an interim dividend of ZAR0.30, based on an 81% payout ratio.
- Occupancy rates increased by 1.2% to 93.7%, indicating strong demand for their properties.
- The company completed significant development activities, including 44,000 square meters of construction worth ZAR1.4 billion.
- Attacq Ltd (JSE:ATT) successfully disposed of its remaining MAS shares, generating ZAR773 million in cash.
- The company's debt matrix improved significantly, with gearing down to 25.3% and an interest cover ratio of 1.93 times.
Negative Points
- Operating expenses spiked significantly, driven by employee costs and once-off costs related to the Waterfall City transaction.
- The company faced negative reversions of 18% in collaboration hubs, indicating challenges in maintaining rental rates.
- The absence of a dividend from MAS impacted distributable income negatively by ZAR30.5 million.
- The company had to fully impair its shareholder loan to Ikeja City Mall in Nigeria due to economic uncertainty.
- The retail trading density growth slowed down to 9%, a decrease from the 14.7% growth seen 12 months ago.
Q & A Highlights
Highlights from Attacq Ltd (JSE:ATT) Earnings Call
Q: What drove the significant spike in operating expenses?
A: Raj Nana, CFO: The increase is attributable to employee costs, including share-based payments and bonuses, which are skewed towards the first half of the financial year. Additionally, there were once-off costs related to the Waterfall City transaction, including advisory and legal fees.
Q: How would Attacq benefit from potential interest rate cuts in the second half of the year?
A: Raj Nana, CFO: Approximately 73.5% of our debt is hedged, with a significant portion of hedges rolling off in the next 12 months. If rates were to cut, we would benefit from lower swap rates, potentially reducing our average swap rate from 8.2% to 7.9%.
Q: Have you met your cost of capital for developments in the first half-year?
A: David Oosthuizen, Development Executive: Yes, we have. For example, the Amrod and client-led transactions are CapEx-linked, and we are hitting our gross profit targets for the Ellipse project.
Q: Would you have sold your stake in MAS if they had resumed dividends?
A: Jackie van Niekerk, CEO: The decision to sell was driven by the lack of control over the MAS Board and the strategic decision to allocate capital where we have significant influence. Even if MAS had resumed dividends, the decision to sell would likely remain unchanged.
Q: What is the highest income-producing asset in your portfolio in terms of yield?
A: Raj Nana, CFO: One of our collaboration hubs, which yields in double figures. However, we focus on a balanced portfolio with assets yielding between 7.5% and 8.5%, reflecting quality and growth potential.
Q: Does the MAS share sale increase the capacity for share buybacks?
A: Jackie van Niekerk, CEO: Yes, the sale provides more liquidity for potential share buybacks. We have already conducted ZAR5 million in share buybacks and may consider more based on target pricing.
Q: What are your thoughts on capital allocation post-MAS sale?
A: Jackie van Niekerk, CEO: We are focusing on reinvesting the proceeds into income-generating assets, particularly in Waterfall, to ensure continuous growth in NOI.
Q: What is the highest growth potential asset in your portfolio?
A: Jackie van Niekerk, CEO: Logistics assets have shown consistent growth and positive lease renewals. Retail has also performed well post-COVID, but we remain cautious due to consumer dependency and high interest rates.
Q: Do you have any intention to increase your shareholding in the Mall of Africa to 100%?
A: Jackie van Niekerk, CEO: Yes, it would be an easy increase in capital allocation, but it must come at the right price.
Q: When did the retail portfolio last deliver positive reversions?
A: Michael Clampett, Property and Asset Management Executive: The portfolio was growing prior to the pandemic, with the last positive reversions seen in 2019.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
