Recently-listed property owner and developer Attacq, together with its partner Hyprop, has announced a major deal in the R900m acquisition of African Land, owner of the Lusaka-based Manda Hill shopping centre. It’s a deal that’s sure to spark the imagination of investors as copper-rich Zambia is one of the fastest growing countries on the continent and its capital city one of the most rapidly developing. Attacq’s CEO Morne Wilken popped across to the CNBC Africa studios today to explain the rationale for a transaction which means African Land’s proposed listing on the JSE has been aborted – for now. – AH
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ALEC HOGG: Recently listed Attacq has reached an agreement to acquire 12.4 percent of African Land for R110M. Hyprop is also part of the deal and it’s going to take 87 percent for R768M. It’s an interesting transaction because African Land was going to list on the Johannesburg Stock Exchange. Joining us now to help us understand what happened is Attacq’s Chief Executive, Morné Wilken. Morné, did you hear about these people only at the time they wanted to list on the JSE and the Lusaka Stock Market?
MORNé WILKEN: Yes, we only learned of the listing when we met with African Land when they presented the opportunity, specifically. We do believe they have a quality asset. That’s actually why we had a lot of interest in –specifically – their asset. The person who is actually behind Africa Land – Kevin (Teeroovengadum) we do believe, has a lot of quality and experience in Africa and I think he’s a valuable resource to our strategy in terms of what we, as Attacq, want to do.
ALEC HOGG: Quality asset: what is it that they have?
MORNé WILKEN: Manda Hill is a 44,000 square metre mall in Lusaka, which is quite big in terms of a regional mall by Africa’s standards. You don’t come by those assets easily, so we saw that as a huge opportunity. That’s why we actually went the route of buying the whole company between Hyprop and us. It’s in line with the Attacq Africa strategy, and we saw it as a huge opportunity.
GUGULETHU MFUPHI: You’re doing a deal together with Hyprop: how so?
MORNé WILKEN: We, with Hyprop, actually developed an interest in a company called Atterbury Africa, which is already a company busy doing developments in Sub-Saharan Africa and it just makes sense to take that partnership forward.
ALEC HOGG: Why not let these guys list and maybe take a stake in them and develop it in that way – access to capital etcetera?
MORNé WILKEN: I think that opportunity is always there. There could be a bigger play. We don’t have definite answers at this point in time, but I think there are opportunities. I’m not saying that it’s never going to happen. It’s just that it makes more sense to do the deal as we structured it.
ALEC HOGG: So this 44,000: is it 44,000 square metres?
MORNé WILKEN: That’s correct.
ALEC HOGG: It’s a shopping centre, so it must be worth about a billion rand.
MORNé WILKEN: That’s correct.
ALEC HOGG: That will be part of your partnership portfolio, but will you give Kevin money and say ‘go and build more’?
MORNé WILKEN: No, Africa Land’s strategy is to buy completed properties where the Atterbury Africa initiative is actually developing stuff, so as part of the bigger strategy it makes sense. In terms of Manda Hill, there is some extra bulk available where you can extend on it – specifically a hotel – and we do believe there’s an upside in the rentals we’re currently receiving in the mall.
ALEC HOGG: Is he going to run Atterbury Africa, then?
MORNé WILKEN: No, he’s Africa Land so he’ll stay with Africa Land. Atterbury Africa is run by James Ehlers from Atterbury.
ALEC HOGG: So that will continue.
MORNé WILKEN: Those are developments, and those are completed.
ALEC HOGG: So if I understand you correctly, Kevin is going to carry on with Africa Land. He’ll get it to a stage where you then perhaps will list it?
MORNé WILKEN: Yes, there are always opportunities.
GUGULETHU MFUPHI: How important is the African story for you?
MORNÉ WILKEN: From an Attacq point of view, what we’ve done is we actually have investments, which forms 66 percent of our balance sheet, and then you have the developments. The investments give us opportunities to invest in our developments and mitigate the risk in giving us the cash flow on the balance sheet to do that. Investments we split up again in South Africa, Africa, and international and there’s a specification strategy in terms of that, so it’s quite important for us.
GUGULETHU MFUPHI: Were you looking for other deals, similar to this African Land deal?
MORNÉ WILKEN: I think it depends: each deal we’ll take on its own merit, assess it, and then take a decision based on that.
ALEC HOGG: What is it like – being listed? It hasn’t been very long and you’re already getting into some transactions.
MORNÉ WILKEN: It’s very interesting and very busy. I thought the listing was going to take a lot of time. Since we listed, we’re actually very active, but it’s all good. We can’t complain.
ALEC HOGG: The profile that the listing has given you has perhaps brought more deals?
MORNÉ WILKEN: I wouldn’t say that. We have a lot of pipeline with the listing, given that we’ve been a company that’s been around for the last eight years. With Waterfall specifically, there’s a lot of activity, so it’s quite interesting and exciting.
GUGULETHU MFUPHI: That must be giving you sleepless nights too, given the size of the project.
MORNÉ WILKEN: No, not really. I think there are benefits to our Waterfall site and we’re very excited about it.
