Lockdown rent relief knocks the performance of Attacq’s SA portfolio, Newsline

DURBAN – Attacq, the South African-based real estate investment trust, said yesterday its South African portfolio felt the impact of the Covid-19 outbreak, particularly in the last four months of the financial year, after it provided rent relief to its tenants.

As a result, its core distributable earnings and core distributable earnings a share both declined by 10.5percent to R514.2million and 73.1cents a share, respectively in the year to the end of June.

The group said the reduction is due to the performance for the last four months of the financial year, which was largely attributed to rent relief provided to tenants in the form of rental discounts and rent deferrals, as well as a lower collection rate from the South African portfolio as a result of the lockdown restrictions.

Chief executive Melt Hamman said there was no doubt that the last several months had been challenging for the industry and the economy overall.

“However, Attacq started the 2020 financial year with great momentum, resulting in a strong financial performance for our interim period. We believe that our quality South African portfolio and our business model is grounded on the right foundations,” Hamman said.

However, the subdued performance was offset by net operating income growth from the newly completed buildings in Waterfall, a 13.7percent increase in the dividends received from the MAS investment of R214.2m, as well as cash interest received from Rest of Africa investments.

The group said its diversified South African portfolio, a 50/50 split between retail and non-retail properties, had a satisfactory performance against the backdrop of the subdued economy.

Its rental income increased 7.4percent to R2.2billion after taking into account rental discounts of R102.9m, but was offset by lease cancellation fees of R97.5m and additional rental income of R75.1m from buildings completed in the past 24 months.

Net profit from property operations, excluding the IFRS adjustment for straight-line leasing and the net proceeds from the sale of sectional title units, increased by 10.8percent to R1.4bn, benefiting from the completion of eight new buildings in the Waterfall precinct.

The group reported a headline loss of 69.5c a share.

Attacq did not declare a final dividend. However, the total dividend for the year was 45c after an interim dividend paid in March.

The group said the Covid-19 pandemic has had a significantly negative effect on the local and global economy, and a level of uncertainty remained about the future of the economy and its impact on the property industry.

“Attacq remains focused on delivering sustainable income and capital growth by investing in real estate and developments in South Africa,” Hamman said.