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Attacq / Equites transaction relating to industrial properties in Waterfall
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”)
EQUITES PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
JSE share code: EQU ISIN: ZAE000188843
JSE alpha code: EQUI
(Approved as a REIT by the JSE)
(“Equites”)
ATTACQ / EQUITES TRANSACTION RELATING TO INDUSTRIAL PROPERTIES IN WATERFALL
1. INTRODUCTION
Shareholders and noteholders are advised that Attacq (through its wholly owned subsidiary Attacq Waterfall
Investment Company Proprietary Limited (“AWIC”)) and Equites have reached conditional agreement
whereby Attacq will dispose of an undivided half share of the leasehold rights and rental enterprises in respect
of:
- two logistics properties being the Amrod and Massbuild distribution centres; and
- 56 723 m2 of undeveloped land to be co-developed by Attacq and Equites with Cotton On as a tenant
within the Waterfall Logistics Hub (collectively, the “disposal assets”) to Equites, with effect from
1 September 2021 (the “transaction”) and for a total purchase consideration of R444 505 437
(“purchase consideration”). AWIC will continue to hold the remaining 50% interest in the disposal
assets.
2. RATIONALE FOR ATTACQ
The transaction is aligned with Attacq’s stated intention of reducing its debt levels and improving its interest
cover ratio, whilst retaining 50% 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 substantiates Attacq’s ability to transact at the carrying value of its quality assets.
On a pro-forma basis, taking into account this transaction and the proceeds generated by Attacq’s disposals
of its 50% interest in the Deloitte building, shares in MAS Real Estate Inc. and 2 Eglin, Attacq’s gearing
ratio of 50.4% at 31 December 2020 would reduce to 43.4%.
Attacq continues to attract quality light industrial tenants to its Waterfall Logistics Hub. It has a further
275 923 m2 of light industrial leasehold rights (effective share measured in terms of surface area), providing
Attacq with an opportunity to increase its light industrial portfolio, which, once developed, will complement
its existing quality portfolio. The Waterfall City development pipeline continues to attract experienced joint
venture partners, such as Equites, who understand and value the unique investment opportunity in the
Waterfall node.
3. RATIONALE FOR EQUITES
The transaction meets Equites' strategic objectives due to the following reasons:
- Equites has communicated its strategy of pursuing growth in South Africa through high-quality
acquisitions and developments;
- The logistics sector is the best performing sector in the South African property market and high-quality
logistics assets rarely come to market;
- The Waterfall Logistics Hub is regarded as one of the preeminent logistics parks in South African and
this acquisition will increase Equites’ exposure to this node;
- The disposal assets comprise two modern distribution centres and a development lease, let to A-grade
tenants, with a WALE of 9.4years across the three properties; and
- The transaction serves to create further scale in Equites’ high-quality logistics portfolio with stable and
predictable rental growth profiles which enhances capital and income growth in the medium to long-
term.
This acquisition opportunity was secured given Equites’ existing strong relationship with Attacq. Equites
will fund the transaction from available debt facilities. Equites’ LTV ratio, on a pro-forma basis at
1 September 2021, will increase marginally from 31.2% to 32.7%.
4. TERMS OF THE TRANSACTION
The salient terms of the transaction are as follows:
- The purchase consideration will be payable by Equites in cash on the date of transfer of the disposal
assets;
- AWIC will continue to manage the disposal assets;
- The lease agreements with Amrod and Massbuild are triple net leases with the tenants responsible for
all operating costs, assessment rates, insurance, repairs and maintenance. The Amrod lease expires in
December 2028 and the Massbuild lease expires in March 2033. The net initial yield on the assets is
8.9% and 8.2% respectively;
- Cotton On has entered into a 10 year and 2 months lease in respect of a 20 796 m2 distribution centre
with an estimated commencement date of 1 May 2022. The land purchase price payable by Equites is
R32 904 375 and Equites’ share of the estimated development spend is R66 241 670, resulting in an
estimated total development cost to Equites of R99 146 045 (representing an undivided half share).
The estimated yield on the total development cost is 8.1%;
- Equites and AWIC will jointly undertake the Cotton On development and following the acquisition of
the aforesaid land, Equites will fund 50% of the total development costs in respect of the Cotton On
development, which is estimated to be completed in May 2022; and
- The agreement contains undertakings, warranties and indemnities which are normal for a transaction
of this nature.
5. DETAILS OF THE DISPOSAL ASSETS
The property fundamentals of the Amrod and Massbuild distribution centres are robust. Both income-
producing properties are classified as modern logistics facilities with at least 15.5 metre clear height to eaves
and ample yard space. The disposal assets are situated in the Waterfall Logistics Hub, which is an established
logistics node. The Cotton On development will also be in the heart of the Waterfall Logistics Hub. The
transaction will therefore add to the quality, defensiveness and income predictability of Equites’ earnings.
The purchase consideration for the disposal assets is R444 505 437. Based on the two income-producing
properties, the transaction consideration equates to an initial yield of c.8.5%.
Attacq
carrying
Net profit Total value for an
for the six consideration undivided
Weighted months payable half share
GLA average ended 31 for an at 31
(100% of rental per December undivided December
Property Geographical property) m2 2020 half share 2020
name location Sector m2 R R’000 R R
Massbuild Waterfall, Gauteng Logistics 50 033 61.04 11 987 214 601 062 212 470 000
Amrod Waterfall, Gauteng Logistics 37 937 82.34 978 197 000 000 199 951 000
Cotton On Waterfall, Gauteng Logistics 56 732* - n/a 32 904 375 31 769 920^
(land only)
Total 12 965 444 505 437 444 190 920
* Surface area of undeveloped land
^ Carrying value adjusted for cost to complete
The purchase consideration is considered to be in line with fair market value, as determined by the directors
of Equites and Attacq. The directors are not independent and are not registered as professional valuers or as
professional associate valuers in terms of the Property Valuers Profession Act, No.47 of 2000.
6. CONDITIONS PRECEDENT
The transaction is subject to the fulfilment of the following conditions precedent:
- The funders having provided such consents or approvals, in writing, as may be required for the release
of the existing mortgage bonds and the assumption of the assumed debt;
- The landowner and the tenants having provided such consents or approvals, in writing, as may be
required in respect of the transaction; and
- The approval of the Competition Authorities.
7. CATEGORISATION
The transaction is a category 2 transaction for Attacq in terms of the JSE Listings Requirements and
accordingly, does not require approval by Attacq shareholders.
This transaction is not categorisable for Equites in terms of the JSE Listings Requirements and accordingly,
does not require approval by Equites shareholders. For Equites, this announcement is voluntary and for
information purposes only.
6 July 2021
Sponsor to Attacq and Equites Debt Sponsor for Equites
Java Capital Nedbank Corporate and Investment Banking,
a division of Nedbank Limited
Date: 06-07-2021 05:25:00
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