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Attacq upbeat its flagship Waterfall project will boost growth

Posted in News on April 19, 2017

Attacq, the capital growth fund, has not yet realised the impressive returns that investors desire but it is confident that the Waterfall precinct, which is its main development project, will reward them in the long run.

Attacq’s share price closed at R17.35 on Friday. In the middle of October 2013, prior to listing, investors had bought shares via private placement for R15 each, suggesting the value of the group’s share price has grown only about 15.6% in three-and-a-half years.

The company listed in October 2013, with a property portfolio worth about R12bn. From the end of December 2015 to the end of December 2016, the value of the portfolio has been stuck at R27bn.

“Waterfall is our flagship. It is our integrated lifestyle city with various components, which include offices, retail, industrial, and logistics. It is located in the centre of Gauteng and is going to be a very successful node housing world-class tenants and facilities,” says CEO Morné Wilken.

Upon completion, the integrated city of Waterfall will comprise about 1.9-million square metres of office, retail, residential and industrial assets. Waterfall is situated along the N1 between Pretoria and Midrand, with a diverse tenant base. Attacq’s major retail asset is the 131,000m² Mall of Africa in the Waterfall complex. Earlier in March, Attacq said the R5.1bn shopping centre, which is the group’s single largest asset, had exceeded trading expectations in its first eight months.

The mall achieved average turnover per square metre of R2,777 a month from May to December, Wilken says.

“That was comfortably ahead of the average R2,000/m² per month that most new malls typically achieved in the first year or two of operation.”

Waterfall is our flagship. It is our integrated lifestyle city with various components, which include offices, retail, industrial, and logistics. It is located in the centre of Gauteng and is going to be a very successful node housing world-class tenants and facilities

Waterfall’s industrial component is also beginning to gain traction. It is expected to be rolled out over the next 10 years. Last Wednesday, Attacq said the BMW Group had signed on as tenant in a purpose-built 32,000m² regional distribution centre which would open in 2018.

Wilken believes the deal should attract other blue-chip tenants to Waterfall.

“With BMW coming here, we have a large international group giving its stamp of approval to Waterfall City. I expect more top blue-chip tenants to see value in opening offices and industrial centres in the middle of Gauteng. They are often able to save costs and use new green technologies by operating in Waterfall,” he says.

BMW has the option to extend the regional distribution centre of 7,000m² at any time during its lease. On completion the facility will be worth about R300m. The Waterfall Distribution Campus in which it lies will be valued at about R1.6bn on completion.

Attacq was founded in 2005 and it acquired the Waterfall development rights in 2008.

Meago Asset Managers director Thabo Ramushu says Attacq’s net asset value should increase in the long term. “There is no doubt that Attacq’s crown jewel is the Mall of Africa. Based on management’s feedback, it is performing well above expectations with strong initial trading densities emerging in its first eight months of operation.

“The challenge with this is that the bulk of the good news has to be priced in, thereby also creating a substantial base from which it now has to grow its NAV,” Ramushu says.

“One has to question the extent of the remaining upside for Attacq over a shorter horizon as a developer of commercial and warehousing space in Waterfall in a benign local economic environment.

“While there is an argument for consolidation of offices in the node, the key is getting Gautrain into Waterfall Estate to alleviate the traffic congestion on the N1.

“It remains to be seen how many more of these deals [warehousing with BMW] they can conclude.… We do not see demand coming through given the low-growth environment currently,” Ramushu says.