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March 31st, 2016

JSE-listed capital growth property fund Attacq will retain its focus on its development pipeline in Waterfall City, in Midrand, with the opening of the super regional mall, Mall of Africa, considered a key strategic milestone for the company.

Mall of Africa, with a value of R4.9-billion on completion, is fully tenanted and remains on track to open on April 28.

The 131 000 m2 Mall of Africa – South Africa’s biggest single-phase mall development – is the largest project and the anchor development within Waterfall City and “is destined to soon be a real retail drawcard for Waterfall”, Attacq CEO Morné Wilken says.

“The opening of the Mall of Africa . . . will be a true tipping point for Waterfall City and the catalyst for further development,” Wilken says, telling Engineering News that significant benefits, such as higher property demand, will only be seen after the opening of the mall.

The company’s conservative estimates indicate that about 15-million people a year will visit the mall, which is strategically located near the N1 highway.

“The Waterfall node continues to strengthen, with six new properties being completed during the six months to December 31, adding 23 398 m2 of gross lettable area to the portfolio,” Wilken says.

Waterfall City has a further 663 815 m2 available for development.

Attacq is in discussion with developers to effect additional joint venture partnerships in Waterfall and remains focused on the construction of about 212 000 m2 of developments, including the new 45 000 m2 head office for financial services firm PwC.

The company’s South African portfolio includes Newtown Junction, in Johannesburg, Waterfall Business Estate, in Midrand‚ Garden Route Mall, in George, and Eikestad Precint, in Stellenbosch, as well as a 25% share in Brooklyn Mall, in Pretoria.

In addition to optimising its growing R12.4-billion portfolio of operational properties and delivering on its Waterfall pipeline, Attacq remains on the lookout for other growth opportunities in South Africa, Wilken says.

Attacq’s total asset value increased by 32.4% to R27.1-billion in the six months to December 31, compared with R23.3-billion as at June 30, while net rental income increased by 25.5% to R531-million for the six months ended December 31.

The company’s international assets increased by 72.8% to R6.4-billion.

Diversification Strategy
Wilken and Attacq CFO Melt Hamman agree that there are inherent risks and challenges to overcome in the current regional and global economic climate, while, in smaller economies, the indexing of rental in hard currency and tenant migration result in risk.

However, diversification could hold the solution in pressured times, with the company’s blended investments in established and developing markets providing mitigation against such risks, Hamman says.

Attacq will, therefore, pursue further diversification into European markets through its well-performing MAS investment and similar opportunities, Wilken points out.

Internationally, Attacq has invested in new markets in Cyprus and Serbia, which complements its existing Western European exposure through MAS.

In July 2015, the company acquired an effective 48.6% interest in ITTL Trade & Tourist Leisure Park, now known as Mall of Cyprus, the owner of Shacolas Emporium Park and an effective 48.5% interest in Woolworth Commercial Centre, the owner of Engomi Mall.

The Cyprus asset portfolio therefore includes completed buildings, the 27 000 m2 Mall of Cyprus and a 20 000 m2 Ikea store, as well as the 13 600 m2 Engomi Mall, in Nicosia.

Attacq aims to expand Mall of Cyprus by about 6 500 m2, and Mall of Engomi by 1 300 m2, with the company still in the planning phase for the extensions, Wilken says.

The Serbia portfolio comprises five completed and operational retail properties with a gross value of €228.0-million.

The company, together with a local partner, raised a further €40-million for a development fund for additional new developments in Serbia and its surrounds.

Wilken attributes significant market advantages in Central and Eastern Europe to stability, a rand hedge, as well as lower debt rates, which could result in a capital rate compression in future, owing to significant demand in these markets.

He suggests that this could result in a value uplift in the market.

Since the short- to medium-term outlook in sub-Saharan Africa has weakened significantly owing to a strong dollar, depressed commodity prices and a lack of stability in power supply, Attacq will focus on delivering Kumasi City Mall, in Ghana, by April 2017, as well as focus on active asset management of existing assets through the cycle.