REIT Attacq in US$30.9m deal with Equites Property Fund as it reduces debt

SOUTH AFRICA – Attacq, a leading South African retail, office and industrial real estate investment trust, through its subsidiary Attacq Waterfall Investment Company (Awic), has conditionally agreed to dispose of a 50 percent share of its leasehold rights and rental enterprises within the Waterfall Logistics Hub to Equites Property Fund.

The companies said in a joint statement that the deal was valued at US$30.9 million and was with effect from September 1, 2021.

The two Logistics Hub properties consist of Amrod and Massbuild distribution centers as well as 56 723m² of undeveloped land to be co-developed by Attacq and Equites, with Cotton On as a tenant.

In the deal, Awic would continue to hold the remaining 50 percent interest in the disposal assets.

Attacq said the disposal was in line with its stated intention of reducing its debt levels and improving its interest cover ratio while retaining 50 percent of the disposal assets.

“This transaction, combined with the previously communicated asset disposals, will contribute to a further de-gearing of the Attacq balance sheet, and in addition substantiate Attacq’s ability to transact at the carrying value of its quality assets,” it said.

It said with this transaction and the proceeds generated by Attacq’s disposals of its 50 percent interest in the Deloitte building, shares in MAS Real Estate and 2 Eglin, Attacq’s gearing ratio of 50.4 percent at December 31, 2020, would reduce to 43.4 percent.

Awic would continue to manage the disposal assets. Equites said the deal helped to create further scale in its high-quality logistics portfolio, with stable and predictable rental growth profiles, while enhancing capital and income growth in the medium to long term.

Equites would fund the transaction from available debt facilities. Equites’ loan-to-value ratio would increase from 31.2 to 32.7 percent on September 1, 2021.

“This transaction, combined with the previously communicated asset disposals, will contribute to a further de-gearing of the Attacq balance sheet, and in addition substantiate Attacq’s ability to transact at the carrying value of its quality assets”

In March of 2021, Attacq sold about half its stake in central and eastern Europe focused MAS with the proceeds going towards reducing debt.

Attacq also said it would consider more residential developments at Waterfall City in partnership with Cape Town-based developer DTE Properties, depending on the sales uptake of the 400-unit The Mix, Attacq’s chief development officer Giles Pendleton said.

Attacq and DTE, in a 50/50 joint venture, launched the R500 million (US$34.7 million) The Mix, which will extend some 13 storeys, just adjacent, but linked to Attacq’s Mall of Africa in Waterfall City.

Attacq’s chief development officer Giles Pendleton said in a presentation yesterday that some 70 percent of the studio, one and two-bedroomed units, to be priced between R1 million (US$69,485) and 2 million (US$13,8971) would need to be sold before construction began, but they expected that all the units would be sold in the next 4 to 6 months.

D2E director Robin Magid said the development would be distinctive from other new residential developments.

Aimed primarily at millennials and young professionals, he said The Mix aimed to embrace the typical lifestyle of millennials, which revolved around social activities and where an apartment was more of a place to sleep and owning a unit at The Mix would effectively be like owning sectional title in a hotel.

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