Home Money Attacq slashes debt, however nonetheless no dividends

Attacq slashes debt, however nonetheless no dividends

Attacq slashes debt, however nonetheless no dividends

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JSE-listed actual property funding belief (Reit) Attacq has slashed its debt by 15.4% to R8.6 billion and elevated distributable earnings per share by 33.6% for its half-year ended December 31 2021. However the group remains to be not declaring dividends.

That is mirrored in its newest interim outcomes, published on Monday.

Attacq didn’t declare dividends for its full-year to the tip of June 2021, because of the Covid-19 monetary fall-out and commerce restrictions, which noticed the group and most of its friends being pressured to supply thousands and thousands of rands in rental reduction to hard-hit tenants.

Learn:
Mall of Africa owner Attacq declares no dividend, but will retain Reit status
Attacq to add R500m micro apartments development to Waterfall City mix

The group is constant to take a cautious strategy, opting to not pay out an interim dividend and as a substitute bolstering its steadiness sheet. That is regardless of the restoration in distributable earnings.

Attacq final paid out an interim dividend of 45 cents a share for its half-year ended December 2019, which was successfully “pre-Covid”.

“The board of administrators has elected to take a conservative strategy to capital administration and has due to this fact resolved to not declare an interim dividend for the six months ended 31 December 2021,” Attacq mentioned in its short-form interim outcomes Sens assertion.

Causes

Attacq CEO Jackie van Niekerk instructed Moneyweb throughout a outcomes presentation that the conservative transfer is because of “ongoing international financial uncertainty” and in addition geared toward “guaranteeing long-term sustainability” for the group.

Nonetheless, Attacq CFO Raj Nana intimated that the group is seeking to pay out some type of dividend at year-end. He mentioned in the course of the presentation that Reits pays out their dividends inside 4 months of a gaggle’s year-end as a way to retain their Reit standing.

Attacq is just not the one SA Reit to withhold an interim dividend within the newest reporting season.

Final week each Hyprop and Fortress introduced they might not declare interim dividends. Nonetheless, trade majors Growthpoint and Resilient proceed to pay half-year dividends.

Learn: Growthpoint ups interim dividends

Decreasing debt

Nana confused that the important thing focus of the group during the last 18 months was to scale back its debt and deal with its capital construction as a way to deliver down its gearing or loan-to-value (LTV) ratio under the 40% mark.

This was one of many key optimistic options of the group’s newest outcomes, with Attacq reporting that it had reduce its LTV ratio all the way down to 38% on the finish of its newest half yr (December 2021), from 46.3% on the finish of its comparative half yr (December 2020).

“Our improved gearing is attributable to the group’s complete interest-bearing borrowings declining 15.4% to R8.6 billion, in comparison with R10.2 billion in the course of the comparative interval,” mentioned Nana.

“The group maintained a powerful liquidity place of R1.8 billion as proceeds from disposals executed in the course of the interval below overview have been deployed to pay down and scale back debt,” he added.

Nana identified that Attacq had in reality bought greater than R2.8 billion in belongings during the last 18 months to deliver down its debt and LTV within the face of the Covid-19 storm.

Most of this was realised via Attacq’s important sell-down of its main stake in European-focused MAS Actual Property. Pre-Covid, the group held greater than 40% in MAS, however presently Attacq’s stake stands at round 6.5%.

Learn:
Waterfall City developer Attacq has now sold over R1.2bn in MAS
The PIC is on the commercial property acquisition trail
Debt strain forces Attacq to sell further R388m MAS stake

Van Niekerk and Nana reiterated in the course of the outcomes presentation that the group doesn’t plan to promote additional stakes in MAS anytime quickly, particularly since MAS has returned to paying out dividends.

Nana mentioned the notable improve in Attacq’s distributable earnings per share to twenty-eight.2 cents (excluding revenue earned from the sale of residential models at Waterfall Metropolis of 9.35 cents per share) was primarily pushed by the dividend obtained from its funding in MAS, valued R46.1 million.

“It proves that our resolution to carry the remaining 6.5% in MAS was a prudent one, because the funding delivered capital development and dividend earnings for the reporting interval.”

Analyst’s feedback

Commenting on property counters corresponding to Attacq and Hyprop not declaring interim dividends, Reitway International chief funding officer Garreth Elston mentioned it is smart contemplating that many Reits are nonetheless below strain even in 2022.

“We have now not been too stunned by the fact of a number of SA Reits remaining below monetary strain that has resulted in them not paying interim distributions,” he mentioned.

“The truth on the bottom is that South African companies and customers stay below strain, and the will increase in inflation plus the will increase in rates of interest don’t bode nicely for any actual enhancements.”

One other property sector analyst (who didn’t need to be named) mentioned that in Fortress’s case, the group’s non-payment of an interim dividend is “clearly linked to the decision which was proposed and never handed” on March 18. This decision associated to proposed changes to the group’s A and B share construction.

“Within the different Reits that aren’t paying interim dividends, I believe it’s partly linked to managing liquidity and steadiness sheets, particularly in mild of there nonetheless being uncertainty and heightened volatility within the markets,” he added.

“There isn’t a [JSE] requirement for Reits to make interim funds … My sense is that the lower-leveraged corporations will proceed to declare interim divis because the market will principally possible desire this, however maybe it’s a gradual transition to decrease adoration of interim divis,” he mentioned.

Hearken to Attacq’s CFO talking to Fifi Peters on its interim outcomes: 

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