To view the PDF file, sign up for a MySharenet subscription.

ATTACQ LIMITED - COVID-19 impact on business and withdrawal of full-year distribution guidance

Release Date: 01/04/2020 15:12
Code(s): ATT     PDF:  
 
Wrap Text
COVID-19 impact on business and withdrawal of full-year distribution guidance

ATTACQ LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/000543/06)
JSE share code: ATT ISIN: ZAE000177218
(Approved as a REIT by the JSE)
(“Attacq” or “the company”)


COVID-19 IMPACT ON BUSINESS AND WITHDRAWAL OF FULL-YEAR DISTRIBUTION GUIDANCE


Attacq supports the swift and decisive action taken by government to curb the spread of COVID-19 and is committed to
play its role in helping to effectively mitigate transmission risks and more specifically supports the current 21-day national
lockdown.

As part of our commitment to creating safe and sustainable spaces, Attacq is committed to ensuring the safety and wellbeing
of its stakeholders and has implemented the World Health Organisation’s recommended sanitisation measures across all
the assets in our portfolio.

South African portfolio

Following the commencement of the lockdown period only tenants classified as essential services remain open. Attacq, in
collaboration with its tenants, are ensuring that only essential items and services are sold in accordance with approved
guidelines. Safety and hygiene are focus areas for tenants, customers, suppliers and employees. Attacq’s management team
has had discussions with national retailer tenants in respect of their responses to COVID-19 to ensure compliance with
recommended safety standards during the lockdown period. Attacq’s full security compliment is working during the
lockdown period as well as cleaning staff, but on reduced shifts.

Attacq has a diverse rental income stream as detailed in our interim results for the six months ended 31 December 2019:

                                                                                      Rental income       Rental income
 Sector                                                                                       R’000                   %
 Retail                                                                                     577 827               51.1%
 Office and mixed-use                                                                       419 919               37.1%
 Industrial                                                                                 107 533                9.5%
 Hotel                                                                                       20 168                1.8%
 Head office                                                                                  5 552                0.5%
 Total                                                                                    1 130 999              100.0%

Attacq’s standard lease agreements prohibit the withholding or set-off of rental income, but under the current circumstances
Attacq has taken a view to support their tenants on a data-driven case-by-case basis. Whilst the retail sector has been
impacted the most, tenants from other sectors have also been impacted to varying degrees. Attacq is performing a detailed
analysis of the requests, considering various possible options and the impact thereof in trying to assist our tenants over this
period.

Attacq is part of a collective industry property body comprising members of the South African Property Owners Association
(SAPOA), the South African Council of Shopping Centres (SACSC) and The SA REIT Association. This body has set up
multiple task teams to understand the impact of COVID-19 on the operations of landlords and to assist in formulating an
appropriate response thereto. The scope of the task teams includes engaging with national treasury, regulators and banks.
                                                                                                                             
Developments at Waterfall

The 42 500m2 Deloitte head office reached practical completion on 31 January 2020 and beneficial occupation began in a
phased approach with the lease commencing on 1 April 2020.

The Continuity SA building, located in Waterfall Corporate Campus, reached practical completion on 31 January 2020,
with the lease having commenced on 1 March 2020.

The following four developments are currently under construction:
• Phase 1 of Ellipse, the high-rise luxury residential towers;
• Courtyard Hotel, Nexus Waterfall;
• Nespresso warehouse; and
• Waterfall Corporate Campus, building 4.

All sites have been temporarily closed during the lockdown period, similar to a site closure over the annual December
builders’ holiday period. There is currently no drawn interest-bearing debt against any of the developments under
construction.

Investment in MAS Real Estate Inc. (MAS)

MAS declared an interim dividend on 2 March 2020 of 2.24 Euro cents per share which was paid to all MAS shareholders
on 27 March 2020. Attacq’s total dividend received was R112.4 million. In line with Attacq’s accounting treatment of
including dividends from associates in the period it is received, this dividend will be included in the distributable earnings
calculation for the six months ending 30 June 2020. The total cash dividend received from MAS for the year ending
30 June 2020 is R233.6 million.

For more information in respect of MAS’ response to COVID-19, please refer to the MAS voluntary SENS announcement
issued on 16 March 2020.

Rest of Africa retail investments

Attacq’s Rest of Africa retail investments comprise:
• a 31.8% shareholding in AttAfrica Limited (AttAfrica), which is invested in three retail properties in Ghana, namely
  Accra Mall and West Hills Mall in Accra and Kumasi City Mall in Kumasi; and
• a 25.0% shareholding in Gruppo Investment Nigeria (Gruppo), the owner of Ikeja City Mall, Nigeria.

The Ghanaian government stepped up its measures to combat COVID-19 by implementing a two-week lockdown in the
greater Accra and Kumasi metropolitan areas commencing 30 March 2020. During this time residents of these areas are
only to leave their homes for essential needs such as food, water, medicine and banking services.

On 29 March 2020, the Nigerian government announced additional steps to fight COVID-19. Three states have been placed
on lockdown for a two-week period commencing 30 March 2020, including Lagos state in which Ikeja City Mall is located.
During the lockdown, only businesses involved in the provision of essential goods or services, including food, may remain
open.

In setting its guidance for the financial year ending 30 June 2020, Attacq assumed that AttAfrica would not make any
contribution to distributable earnings and in the year to date the funds received from Gruppo have already met Attacq’s
distributable earnings expectations from the investment.
                                                                                                                             
Update on disposals

As at 31 December 2019, Attacq reported three assets held for sale, namely
• 2 Eglin, Sunninghill;
• the joint venture portion of Ellipse; and
• Newtown precinct.

The transactions relating to the joint venture and Newtown have subsequently closed with proceeds of R106.5 million
received in cash. There was no debt against these assets. In addition, the Attacq surety in respect of the Newtown debt has
been released and Attacq has no further financial obligations towards this asset.

Borrowings

As at 31 December 2019, 85.6% of Attacq’s interest-bearing debt was provided by South African banks with the remaining
14.4% provided by South African institutional lenders. Attacq does not have a domestic medium-term note programme in
place.

Approximately R1.2 billion of interest-bearing debt matures in December 2020, relating to the original three-year tranche
of an Attacq Retail Fund Proprietary Limited and Lynnwood Bridge Office Park Proprietary Limited facility. The tranche
forms part of a larger R3.2 billion syndicated loan funded by six lenders (three banks and three institutions) which is secured
over a combination of dominant retail properties and a mixed-use precinct comprising office, retail and a hotel property.
Discussions are currently being held with the lenders and we expect to refinance the facility in the forthcoming months.

Distribution guidance

The interim dividend for the six months ended 31 December 2019 was declared on 3 March 2020 and paid on
23 March 2020.

Given the fluidity of the situation, it is not currently possible to quantify the impact that COVID-19 will have on Attacq’s
operations. As a result, Attacq withdraws its full-year distribution guidance to 30 June 2020.

Attacq will continue to monitor the situation and provide shareholders with updates in due course.

The information contained in this announcement has not been reviewed or reported on by Attacq’s external auditors.


1 April 2020

Sponsor
Java Capital

Date: 01-04-2020 03:12:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story