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ATTACQ LIMITED - June 2020 pre-close update and trading statement

Release Date: 30/06/2020 14:01:00      Code(s): ATT       PDF(s):  
June 2020 pre-close update and trading statement

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” or “the group”)


JUNE 2020 PRE-CLOSE UPDATE AND TRADING STATEMENT


Subsequent to the SENS announcements published on 1 April 2020, 15 April 2020 and 15 May 2020, Attacq wishes to
provide a further update on the COVID-19 impact on its business, prior to entering a closed period on 1 July 2020.

Liquidity and interest-bearing debt
As at 31 May 2020, available resources total R1.1 billion, comprising R741.0 million of cash and R310.0 million of
committed liquidity facilities with banks. The group’s debt facilities are spread between five South African banks and four
South African institutions with no exposure to the bond markets.

Attacq has group covenants relating to loan to value (“LTV”) and net asset value as well as portfolio LTV and interest
cover ratio (“ICR”) covenants in place with its lenders. Covenant measurements are reported bi-annually in March and
September each year, based on the most recent December interim and June full year financial results respectively. No group
or portfolio covenant breaches are anticipated for the covenant reporting period ending 30 June 2020 to be measured in
September 2020.

In its results for the interim period ended 31 December 2019, Attacq reported that R1.2 billion of its interest-bearing debt
was due for repayment by 31 December 2020, with a further R3.5 billion due by 30 June 2021. Given the economic impact
of COVID-19 and the uncertain outlook created by it, Attacq pro-actively approached its lenders requesting the extension
of any debt maturing prior to 30 September 2021 as well as relaxations of its portfolio ICR covenants in the form of reduced
covenant levels or waivers of the covenants, as the case may be.

Attacq’s requests were well received by the lenders with credit approval obtained for all debt maturities to be extended to
beyond 30 September 2021 and for the relaxation of its portfolio ICR covenants for the 31 December 2020 measurement
period to be reported in March 2021. In line with Attacq’s focus to preserve liquidity in these uncertain times, Attacq agreed
with its lenders to not declare a final distribution for the financial year ending 30 June 2020 or an interim distribution for
the six-month period ending 31 December 2020.

Attacq’s capital structure, and in particular its group ICR, has been an area of continued focus, with Attacq’s group ICR
improving to 1.91 times as reported in its 31 December 2019 results. The onset of COVID-19 will increase the focus on
Attacq’s capital structure with the aim of achieving meaningful debt reductions by utilising the proceeds from the disposal
of assets.

It is worth noting that Attacq does not have any funded or guaranteed B-BBEE shareholding structures in place.

South African portfolio
The property and asset management teams continue to proactively engage and assist individual tenants across the entire
portfolio (retail, offices, industrial and hotels) to ensure the long-term sustainability of Attacq’s tenants. The overall
occupancy rate remained consistent with a 0.2% decrease from 94.0% as at 31 December 2019 to 93.80% as at 31 May
2020. Unoccupied space at year end mainly relates to 2 Eglin, Brooklyn Bridge Office Park and The Ingress - building 2.

Collection of rentals is the key property fundamental. The quality and diversity of Attacq’s tenant base is evident from the
collection rates achieved to date. Rentals are invoiced monthly in advance with rentals typically due on the first day of the
month.

The table below provides the pre-COVID-19 March collections and the extent of relief granted for April, May and June
2020, as a percentage of rental:
Collection percentage* before discounts and deferrals                      Total (%)             Retail (%)      Non-retail (%)
March                                                                           98.0                   97.7              99.2
April and May (average)                                                         70.5                   49.9              89.5
June                                                                            79.6                   66.0              91.7
12 months average - Jul 2019 to Jun 2020                                        92.0                   87.3              96.8
                                *
Collection percentage after discounts and deferrals
March                                                                            n/a                    n/a              n/a
April and May (average)                                                         82.5                   64.3              96.5
June                                                                            84.5                   72.1              95.0
12 months average - Jul 2019 to Jun 2020                                        94.5                   90.7              98.3

* Data updated 23 June 2020


The health and safety of our shoppers and tenants remains our top priority. We are aware of the need in our communities
and have to date, through the Attacq Cares initiative, donated R574 064 in food parcels, reaching 4 138 families.

Developments at Waterfall
During the financial year eight buildings were completed in Waterfall with a total primary gross lettable area (“PGLA”) of
66 672m2 and an effective PGLA of 42 657m2. There are currently four developments under construction, as detailed in the
table below. All sites have reopened for development. The impact of COVID-19 on the practical completion and lease
commencement dates has been assessed and programmes have been adjusted.

Buildings under construction                                                 Total            Effective                % Let         Practical
                                                                           PGLA m2              PGLA m2                             completion
                                                                                                                                         date*
Waterfall City
                                                                                                                        
Waterfall Corporate Campus – Building 4                                      4 976                2 488                Under           Q3 FY21
                                                                                                                 negotiation
Nexus Waterfall, Courtyard Hotel (168 keys)                                  6 273                6 273                100.0           Q2 FY21
Ellipse Waterfall, Newton and Kepler towers (269
                                                                            17 044                8 522            81.0 sold           Q1 FY22
units)
    Waterfall Logistics Hub
    Nespresso warehouse                                                      4 757                4 757                100.0           Q1 FY21
    TOTAL                                                                   33 050               22 040       more than 80.0
*
    The impact of COVID-19 on practical completion and lease commencement dates has been assessed and programmes have been adjusted

Investment in MAS Real Estate Inc (“MAS”)
For an update on the impact of COVID-19 on MAS’ business, please refer to the voluntary trading statement published by
MAS on SENS on 27 May 2020 and available at www.masrei.com, wherein, inter alia, MAS informed its shareholders of
its decision not to declare a final dividend for the six months ending 30 June 2020. This has been taken into account in
managing Attacq’s liquidity position.

Rest of Africa retail investment
As at 31 December 2019, the Rest of Africa retail investment represented 2.2% of Attacq’s total gross assets. Attacq’s
stated strategy is to exit this investment in an orderly fashion. Attacq does not have any debt against this investment and
future proceeds will be utilised to reduce interest-bearing debt elsewhere in the group. Progress is being made on the
disposal of Ikeja City Mall, Nigeria.

To improve alignment between the AttAfrica Limited (“AttAfrica”) shareholders, the minority shareholding in AttAfrica
was acquired for a nominal consideration by Attacq and Hyprop Investments Limited. The rights in respect of the AttAfrica
shareholder loans are now pari passu and Attacq has a 26.9% share of all cash flows. Shareholders expect to implement a
portfolio-level debt refinance in the near future which should result in interest savings.

COVID-19 lockdowns in Ghana (Accra Mall, West Hills Mall, Kumasi City Mall) and Nigeria (Ikeja City Mall) adversely
impacted trade and foot count. The situation has started to improve with the easing of lockdowns in these countries.

Trading statement
Attacq has elected distribution per share (“DPS”) as its relevant measure of financial performance. In terms of the JSE
Listings Requirements, the company is required to publish a trading statement as soon as it is satisfied that a reasonable
degree of certainty exists that the DPS for the period to be reported upon next will differ by at least 15% from that of the
prior corresponding period.

Given the uncertainty regarding the economic outlook as a result of COVID-19, the need to preserve liquidity and ensure
compliance with funding requirements, the board has resolved not to pay a final distribution for the year ending
30 June 2020 or an interim distribution for the six-month period ending 31 December 2020.

Consequently, Attacq will not be declaring a final distribution for the financial year ending 30 June 2020 and shareholders
are advised that Attacq’s DPS will decline by 44.8% from the total DPS of 81.5 cents per share for the year ended 30 June
2019 (as reported) to 45.0 cents per share, being the interim distribution for the period ended 31 December 2019.

Notwithstanding the above, Attacq expects that it will satisfy the REIT requirements set out in the JSE Listings
Requirements with regards to its year ending 30 June 2020.

Attacq will update shareholders regarding its anticipated distributable earnings for the year ending 30 June 2020 in due
course once a reasonable degree of certainty exists in this regard.

Corporate calendar
Shareholders are invited to join management for the pre-close presentation at 14h00, 30 June 2020. A copy of the
presentation is available on www.attacq.co.za and the recording of the presentation will be available shortly afterwards on
the Attacq website.

Attacq’s annual results presentation is scheduled on Tuesday, 22 September 2020.

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

30 June 2020


Sponsor
Java Capital






Date: 30-06-2020 02:01:00
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