Performance review



Manufactured resources are allocated across our four key value drivers:

  • South African portfolio
  • Waterfall development
  • Investment in MAS
  • Rest of Africa retail investments.

Value is created by effectively allocating manufactured resources and their subsequent development and/or management.

Performance highlights

  • MSCI awards for best-performing property fund over three years, based on annualised return, in the office sector (2017) and industrial sector (2017)
  • SAPOA awards for best corporate development for PwC Towers and best industrial development for BMW Group SA Regional Distribution Centre
  • Mall of Africa won the Sunday Times Generation NEXT award for the coolest mall.

Governance oversight

  • Investment committee, audit and risk committee, combined assurance forum, exco and portfolio committee

Strategic matters

More details

Operational team Standing: Jessica Govender, Grant Wing and Debbie Theron Sitting: Jenelle Frere, Danny Vermeulen, Jackie van Niekerk and Michael Clampett

Manufactured Capital

Progress in 2018

Our 2018 focus     Achieved     More information  
South African portfolio    
Focus on property fundamentals     Continuous     First key value driver: South African portfolio.  
Innovation as part of technology focus     Continuous      
Strengthen and expand portfolio     Continuous      
Net operating income focus shift     Continuous      
Waterfall development    
Focus on achieving KPIs set for the development team     Partially     Second key value driver: Waterfall development.  
Delivering high-quality buildings          
Investment in MAS    
Target 30.0% growth in distributions         Third key value driver: Investment in MAS.  
Expand into Central and Eastern Europe          
Rest of Africa retail investments    
Focus on improving operational performance     Continuous     Fourth key value driver: Rest of Africa retail investments.  
Refinancing existing portfolio          

2019 Looking ahead

South African portfolio
  • Focus on optimising net operating income
  • Proactively manage trading densities and rent to turnover ratios
Waterfall development
  • Developing and ongoing management of Waterfall City and Waterfall Logistics Hub
  • Developing residential units in Waterfall City
Investment in MAS
  • Targeted 15.0% growth in distributions
  • Unlocking value from acquisition and development pipeline
Rest of Africa retail investments
  • Management continues to focus on optimising net income and asset value

South African portfolio


The value of our existing South African portfolio increased to R21.1 billion (2017: R18.1 billion), making up 72.5% (2017: 66.1%) of our total gross assets.

The MOA is at the heart of the Waterfall development, our competitive advantage. Office and mixed-use, as well as light industrial buildings, surround the mall, densifying Waterfall City. The future first-class residential offering will further complement the city and support a “work, live, play” lifestyle.

Geographical profile by PGLA and gross monthly rental

Geographical profile by PGLA and gross monthly rental

Sectorial profile by PGLA and gross monthly rental

Effective PGLA evolution

Effective PGLA evolution

First key value driver: South African portfolio

Our property management vision

We introduced the FRESH (fun, relevant, easy, social and helpful) concept as a focus point for our property management team. The aim is to create a compelling, enjoyable experience that surprises and delights our customers (shoppers and tenants) and makes them smile.

Leasing and vacancy management

Leasing and vacancy management is aimed at attracting new tenants and long-term tenant retention. A number of our newer properties have single tenants with long-term leases, resulting in a longer-dated lease expiry profile (below). Our weighted average lease expiry profile increased to 6.8 years (2017: 6.4 years).

Lease expiry profile (PGLA m2)

Lease expiry profile (revenue R000)

      Vacant Monthly 2019 2020 2021 2022 2023+
Retail     2 367 5 641 8 148 23 046 3 054 22 059
Office     483 3 264 5 068 934 32 140
Industrial     7 388
Hotel     1 510 1 604
Total     2 367 6 124 12 922 28 114 3 988 63 191
      2018   2017  
Sector vacancies as at 30 June 2018     Vacancy
Retail     2.8   9 170   2.4   7 869  
Office and mixed-use     15.3   44 944   5.0   13 094  
Light industrial     5.3   8 518      
Portfolio vacancy     7.8   62 632   3.0   20 963  
Less: Vacancies filled post year end     (2.7)   (21 791)   (0.6)   (4 431)  
Current portfolio     5.1   40 841   2.4   16 532  
Waterfall     11.2   4 573   23.4   3 870  
Balance of portfolio     88.8   36 258   76.6   12 662  


During the year, leases totalling 90 909m2 expired, with 24 996m2 (27.5%) renewed, 20 732m2 (22.8%) relating to PwC vacating the 2 Eglin building, 42 296m2 (46.5%) leased by new tenants and 2 885m2 (3.2%) remaining vacant.

Overall portfolio vacancies, measured in terms of PGLA, increased by 41 669m2 when compared with 30 June 2017, mainly as a result of PwC moving into their new head offices at Waterfall City, vacating 2 Eglin Road, Sunninghill. Subsequent to 30 June 2018, 21 791m2 of total vacant space was let, reducing the overall vacancy rate to 5.1%. Vacancies that were filled post 30 June 2018 relate mainly to a portion of 2 Eglin Road, Dis-Chem warehouse and Gateway West. Vacancies not yet filled refer to 2 Eglin Road, Brooklyn Bridge Office Park and the Newtown precinct.

Tenant profile

The credit quality of tenants in our portfolio is reflected in the high percentage of A-grade tenants. The majority of our tenants, 78.7% (2017: 72.2%) by PGLA, are categorised as A, being large international and national tenants, large listed entities, and government or major franchises.

Smaller international and national tenants, listed tenants, franchisees, medium to large professional firms categorised as B, make up 16.4% (2017: 22.4%) of our tenancy.

The balance comprises 326 (2017: 369) smaller tenants and sole proprietors categorised as C.

Managing arrears debt

Arrears management is a proactive process to ensure consistent progress in the current economic climate and given the increased cost of occupancy for our tenants. To mitigate our exposure, processes for tenant credit assessment and financial vetting are conducted upfront and throughout the lease tenure.

Tenant profile (%)

We welcome all new tenants to Waterfall, eg the tenants of all five newly completed buildings:

Through close relationships with our tenants and understanding their needs and business challenges, we are managing arrears effectively and proactively to mitigate potential losses.

Breakdown of trade receivables     2018 
Current     38 771   24 370   +57.5  
30 and 60 days     10 095   15 027   -32.8  
>90 days     16 228   12 979   +25.0  
Total arrears     64 694   52 376   +23.5  
Less: Provision for doubtful debt     (19 586)   (16 021)   +23.5  
Trade receivables     45 108   36 355   +24.1  
Net arrears (trade receivables past due but not impaired)     6 737   11 985   -43.8  
Rental income     2 035 494   1 861 093   9.4  
Total arrears* (% of rental income)     2.8   2.5    
Trade receivables* (% of rental income)     1.9   1.7    

* Excluding VAT.


The capitalisation and discount rates for the 2018 valuations remained largely unchanged when compared with the previous year. Fair value adjustments on buildings in the South African portfolio were negatively impacted by impairments on 2 Eglin, Newtown precinct and Brooklyn Mall. The negative fair value adjustment on Newtown precinct is due to lower rental projections while Brooklyn Mall’s valuation decreased due to rental income being negatively impacted by increased competition in the area.

Summarised highlights     2018 
Number of properties     41   36  
Total investment property (R000)     19 356 465   16 362 284  
Total rental income (R000)     2 028 821   1 848 303  
PGLA (m2)     802 256   703 392  
Value per PGLA (R/m2)     24 128   23 262  
Weighted average monthly gross rentals per m2 (R/m2) – including rates     178   175  
Historical average annualised property yield (%)     6.3   6.5  
Weighted average rental escalation^ (%)     7.2   7.5  
Weighted average escalation on new/renewed leases^ (%)     6.9   7.8  
Weighted average lease period^ (years)     6.8   6.4  
Vacancy^ (%)     7.8   3.0  
Retention success rate (%)     96.8   97.1  
Average cap rate (%)     7.3   7.3  

^ Based on PGLA.


Our retail and mixed-use precincts by effective value

  Mall of Africa, Waterfall  
Total PGLA
124 713m2

Our 80.0% share of the valuation
R4.5 billion
R5.6 billion
Value per m2
R44 903
  Anchor tenants
Checkers Hyper, Edgars, Game, Woolworths
  Lynnwood Bridge precinct, including Glenfair Boulevard, Pretoria  
Total PGLA
81 992m2
Our share of the valuation
R2.8 billion

R2.8 billion
Value per m2
R34 385
  Anchor tenants
Adams & Adams, Aurecon, City Lodge, Dis-Chem, Planet Fitness, Safari and Outdoor warehouse, Shoprite Checkers, Woolworths
  Garden Route Mall, George  
Total PGLA
53 813m2
Our share of the valuation
R1.4 billion

R1.4 billion
Value per m2
R25 547

  Anchor tenants
Dis-Chem, Edgars, Game, Pick n Pay, Woolworths
  MooiRivier Mall, Potchefstroom  
Total PGLA
49 696m2
Our share of the valuation
R1.2 billion

R1.2 billion
Value per m2
R24 025
  Anchor tenants
Checkers, Edgars, Game, Woolworths, Dis-Chem
  Eikestad precinct, Stellenbosch  
Total PGLA
37 872m2
Our share of the valuation
R939.0 million

R1.2 billion
Value per m2
R24 794
  Anchor tenants
Checkers, Game, Food Lover’s Market Woolworths
  Newtown junction precinct, Johannesburg  
Total PGLA
79 526m2
Our 50.0% share of the valuation
R739.9 million

R1.5 billion
Value per m2
R18 608

  Anchor tenants
City Lodge, Nedbank, Pick n Pay, Shoprite
  Brooklyn Mall and Brooklyn Bridge Office Park, Pretoria  
Total PGLA
98 617m2
Our 25.0% share of the Brooklyn Mall valuation and 100.0% of the Brooklyn Bridge Office Park valuation
R739.9 million

R3.3 billion
Value per m2
R33 775
  Anchor tenants
Checkers, Dis-Chem, Game,
Woolworths, SARS, Counsel’s Forum
Retail     2018      2017  
Number of properties     10   10  
Total investment property (R000)     10 140 174   9 896 383  
Value as % of total South African portfolio     52.4   60.5  
Total rental income (R000)     1 135 254   1 072 011  
PGLA (m2)     337 627   337 510  
PGLA as % of total South African portfolio     42.1   48.0  
Value per PGLA (R/m2)     29 322   29 322  
Net operating income as % of total portfolio*     51.7   51.4  
Weighted average monthly gross rentals per m2 (R/m2) – including rates     214   202  
Historical average annualised property yield (%)     6.1   5.7  
Weighted average rental escalation^ (%)     7.2   7.4  
Weighted average escalation on new/renewed leases^ (%)     7.2   7.8  
Weighted average lease period^ (years)     4.5   4.9  
Vacancy^ (%)     2.8   2.4  
Retention success rate (%)     91.6   95.1  
Net arrears (R000)     6 321   11 695  
Average cap rate (%)     6.9   6.9  

* Sector net operating income, excluding straight-line lease income adjustment as % of total net operating income, excluding straight-line lease income adjustment.

^ Based on PGLA.

Retail sector     %
of area
% of total
Apparel     25.7 21.2 7.8  
Department stores     23.3 19.6 3.3  
Food     13.7 15.6 2.2  
Health and beauty     5.3 11.7 8.0  
Food services     8.1 8.7 (3.8)  
Sportswear and outdoor     4.5 4.9 20.8  
Homeware furniture and interior     6.9 4.3 5.1  
Speciality     3.2 4.3 5.0  
Electronics     2.3 4.3 11.7  
Accessories, jewellery and watches     1.0 2.2 (1.3)  
Books, cards, stationery     1.5 1.4 3.5  
Eyewear and optometrists     0.5 0.8 0.4  
Entertainment     3.6 0.6 2.6  
Luggage     0.3 0.4 7.8  
Services     0.2 0.2 5.1  
Grand total     100.0 100.0 5.3  

Our retail precinct focus in well-established desirable nodes ensures we attract and retain tenants and shoppers. Activities in the period to strengthen and expand retail and mixed-use precincts included:

  • Acquiring one hectare of land adjacent to Garden Route Mall. We are consolidating the two properties and acquiring additional rights for retail and parking
  • Lynnwood Bridge retail is being upgraded and refurbished, enhancing the shopper and tenant environment.

In 2018, the retail environment was affected by corporate failures and rescues, including the Edcon Group, Stuttafords, Deeghuys and Melissas. As part of the Edcon restructure the teams evaluated the trading density, rent to sale ratio in relation to the tenant mix with each mall and Edcon tenant. We have negotiated a structured reduction in our exposure to the Edcon Group that will be implemented between June 2018 and April 2019. As a result, we managed to introduce new tenants in prime locations into our portfolio, provide additional diversity in the tenant mix and reduction of our financial exposure to the Edcon Group.

Major new leases concluded:

  • H&M taking up space in the 1 800m2 Edgars store in Eikestad
  • Edgars reconfiguration at Mall of Africa for new anchor store and Coricraft expansion, reducing the store size from 12 600m2 to 8 800m2
  • Top Shop of 770m2 at Mall of Africa will be subdivided into three new stores, providing more diversity in the tenants mix and improving the mall net operating income.

We are monitoring growth in the online retail market. This has been slow to develop in South Africa, but could accelerate at any time. According to Macquarie research on online retail in South Africa, the market is still in its infancy with high entry barriers. Nevertheless, we need to embrace and understand technology to assist our tenants in ensuring we create the ultimate consumer experience at our malls.

South African Edcon group exposure     Effective 
As at May 2018 – before restructure     28 848    46 364  
Implementation: June 2018 to April 2019 – after restructure     21 510    31 007  
Reduction in exposure     25.4%    33.1%  

The focus in our retail portfolio in the past year remained on trading densities. By looking at footcount and reconfiguring floor space, we ensure our retailers operate and trade at their optimal size. Examples of reconfiguration include Mr Price Group at MooiRivier Mall, supporting better trading densities and creating an opportunity for Woolworths to expand. In total, 16 reconfigurations and replacements at Mall of Africa led to an increase of 236.0% in turnover on the same footprint for December 2017 versus December 2016.

In the retail environment, tenant retention is becoming more challenging. The tenant-mix trend is also shifting to food and beverage, and experiential tenants versus traditional fashion retail. By optimising and reconfiguring our tenant mix (rightsizing tenants), we address shopper needs and current trends, while incorporating the leisure and community ‘pull’ factor.

It is important that our shoppers experience our malls as clean and safe, with helpful staff. We insist on retail floor representative training to ensure excellent service which will translate into excellent shopping experiences.

Technology is an enabler to maximise the customer and tenant experience. During the year, we introduced ticketless parking at Mall of Africa via number plate recognition technology. Mall of Africa also mimicked the ‘one day only’ concept originated by online retail and generated 74 000 interactions with its two-week ‘11-hour sale’ campaign, which has become a bi-annual event. We gained a better understanding of shopper movement in our malls, dwelling times and shopfront efficiency as well as shopper retention rates inside tenanted areas by using anonymised location monitoring WiFi.

Trading densities (R/m2)

Weighted average trading density: R2 805/m2 (June 2017: R2 663/m2)
Average growth: +5.3%

Rent to turnover (%)

Weighted average rent to turnover: 7.7% (June 2017: 7.6%)

Office and mixed-use

Our top Waterfall office and mixed-use buildings by value


PwC Tower

Total PGLA
48 615m2
Our 75.0% share of the valuation
R1.4 billion
R1.8 billion
Value per m2
R36 005

Cell C Campus

Total PGLA
43 890m2
Our share of the valuation
R1.0 billion
R1.0 billion
Value per m2
R23 406


Total PGLA
24 354m2
Our share of the valuation
R631.9 million
R631.9 million
Value per m2
R25 945
Office and mixed-use     2018   2017  
Number of properties     22   19  
Total investment property (R000)     7 501 801   5 188 527  
Value as % of our total South African portfolio     38.8   31.7  
Total rental income (R000)     739 306   663 638  
PGLA (m2)     299 018   254 008  
PGLA as % of total South African portfolio     37.3   36.1  
Value per PGLA (R/m2)     25 088   20 427  
Net operating income as % of total portfolio (%)*     39.8   41.8  
Weighted average monthly gross rentals per m2 (R/m2) – including rates     188   180  
Historical average annualised property yield (%)     6.5   7.6  
Weighted average rental escalation^ (%)     7.8   7.8  
Weighted average escalation on new/renewed leases^ (%)     7.8   7.8  
Weighted average lease period^ (years)     7.6   6.8  
Vacancy^ (%)     15.3   5.0  
Retention success rate (%)     62.4   99.6  
Net arrears (R000)     416   290  
Average cap rate (%)     7.7   7.8  

* Sector net operating income, excluding straight-line lease income adjustment as % of total net operating income, excluding straight-line lease income adjustment.

^ Based on PGLA.

Given the oversupply of office space in key nodes such as Sandton and, to a certain extent, Rosebank, tenants are spoilt for choice and well informed about current vacancies and rental price trends. Office space is widely available and landlords are offering incentives, such as reduced rentals, to fill premises. Negotiations with new tenants have become protracted and more challenging. We compete by demonstrating the value of relocating to Waterfall and, most importantly, focus on cost of occupancy for our tenants. To retain existing tenants, our focus is on building long-term relationships and constantly staying abreast of their changing property and business needs.

Our focus is on the tenant experience, stronger sales teams and fostering our tenant relationships (see social and relationship resource) as our unique value propositions.

Current office and mixed-use trends include growing demand for flexibility in the workspace. Tenants are increasingly looking at precincts that are close to amenities and transport.

Leasing activities during the year include:

  • Letting the Group Five building to Transnet (24 354m2)
  • Group Five relocating to 2 Eglin Road, Sunninghill (4 793m2)
  • Renewing the SARS lease at Brooklyn Bridge Office Park (38.0% of PGLA)
  • Allandale building now fully let (15 359m2)
  • Gateway West now partially let to Sage (6 903m2) and Spaces (2 446m2)
  • The ground and first floors of The Majestic (Newtown precinct) are currently not used by Nedbank.
  • Alternate architectural plans have been prepared for a possible new tenant.

The quality of our office buildings is evident in the diagram below:

Office grading

Allandale building, Waterfall City


Our top Waterfall industrial buildings by value


Total PGLA
37 937m2
Our 75.0% share of the valuation
R400.7 million
R400.7 million
Value per m2
R10 562

Massbuild Distribution Centre

Total PGLA
50 033m2
Our share of the valuation
R400.7 million
R400.7 million
Value per m2
R8 010

BMW Group SA Regional Distribution Centre

Total PGLA
31 987m2
Our share of the valuation
R289.4 million
R289.4 million
Value per m2
R9 047
Industrial     2018   2017  
Number of properties     6   4  
Total value of sector (R000)     1 286 827   870 137  
Value as % of our total South African portfolio     6.6   5.3  
Total rental income (R000)     107 598   67 569  
PGLA (m2)     146 093   102 128  
PGLA as % of total South African portfolio     18.2   14.5  
Value per PGLA (R/m2)     8 808   8 520  
Net operating income as % of total portfolio (%)*     5.9   4.1  
Weighted average monthly gross rentals per m2 (R/m2) – including rates     70   67  
Historical average annualised property yield (%)     5.4   6.4  
Weighted average rental escalation^ (%)     4.9   7.0  
Weighted average escalation on new/renewed leases^ (%)     0.8   7.3  
Weighted average lease period^ (years)     11.4   10.8  
Vacancy^ (%)     5.3    
Retention success rate (%)     100   100.0  
Net arrears (R000)        
Average cap rate (%)     7.7   7.8  

* Sector net operating income, excluding straight-line lease income adjustment as % of total net operating income, excluding straight-line lease income adjustment.

^ Based on PGLA.

Our industrial node at Waterfall Logistics Hub is ideally positioned in Gauteng for modern and purpose-built warehousing and distribution centres. Two industrial buildings and one extension were completed during the year, contributing to a balanced South African portfolio.

Stagnating rentals and rising development costs have slowed demand for industrial occupiers to take up newly developed space, focusing instead on renewing their current leases.

We have concentrated on simplifying and improving design efficiency on our new warehouse developments, as well as constructing smaller-specification buildings where we believe there is greater demand and less competition. This, coupled with our advantage in the market on office and warehouse consolidations, has enabled us to attract some blue-chip tenants during the year. For example, the design of the Dimension Data warehouse reflects the trend of combining warehouse with sizeable office space.

Dis-Chem signed a lease for the K101 warehouse, a 8 518m2 building developed on a speculative basis, and took occupation in August 2018. The Massbuild expansion, completed in December 2017, increased our primary lettable area by 9 839m2.

During the year, we noted an increased focus on utility costs and a requirement for more modern infrastructure, coupled with the growing popularity of a tenant-owner model.

We are focused on completing our Waterfall development pipeline, leasing the remaining speculative midi-warehouse and maintaining world-class facilities.


Our hotel portfolio

City Lodge – Lynnwood, Pretoria

Total PGLA
7 946m2
Our 75.0% share of the valuation
Value per m2
R26 747

City Lodge – Newtown, Johannesburg

Total PGLA
5 828m2
Our share of the valuation
Value per m2
R20 247

City Lodge – Waterfall City, Waterfall

Total PGLA
5 744m2
Our share of the valuation
Value per m2
R20 072

We have three hotels in our portfolio, all leased to City Lodge. The City Lodge in Waterfall City provides an essential service to both our local and international corporate clients and remains in high demand. As Waterfall City grows and densifies we will increase our hotel offering.

Hotel     2018   2017  
Number of properties     3   3  
Total value of sector (R000)     427 663   407 240  
Value as % of our total South African portfolio     2.2   2.5  
Total rental income (R000)     46 663   45 085  
PGLA (m2)     19 518   19 518  
PGLA as a % of total South African portfolio     2.4   2.8  
Value per PGLA (R/m2)     21 911   20 865  
Net operating income as % of total portfolio (%)*     2.6   2.7  
Weighted average monthly gross rentals per m2 (R/m2) – including rates     187   175  
Historical average annualised property yield (%)     7.5   7.6  
Weighted average rental escalation^ (%)     7.0   7.0  
Weighted average escalation on new/renewed leases^ (%)        
Weighted average lease period^ (years)     5.0   6.0  
Vacancy^ (%)        
Retention success rate (%)     100.0   100.0  
Net arrears (R000)        
Average cap rate (%)     8.1   8.1  

* Sector net operating income, excluding straight-line lease income adjustment as % of total net operating income, excluding straight-line lease income adjustment.

^ Based on PGLA.

Waterfall masterplan

Second key value driver: Waterfall development

Waterfall development


The value of the Waterfall development portfolio, comprising 7.8% (2017: 14.1%) of total gross assets, decreased to R2.3 billion (2017: R3.8 billion) as a result of the completion of five buildings, new developments only recently commencing and disposals to development partners.

Waterfall development (including assets held for sale)     2018
Development rights     901 428   1 081 968  
Infrastructure and services     685 875   737 187  
Developments under construction     527 592   1 880 605  
Attacq Sanlam joint venture     143 803   140 999  
Total     2 258 698   3 840 759  

Giles Pendleton was appointed in March 2018 as the head of developments.

Despite a tough economic environment, we continued to receive corporate enquiries for the Waterfall precinct. Enquiries that converted into signed leases with prominent tenants include Accenture, Dis-Chem, Isuzu and Sage. This highlights Waterfall’s emerging prominence as a suitable location for companies wanting to avoid traffic congestion and poor public transport services, as well as companies that want to consolidate offices in Pretoria and Johannesburg into a location equidistant for employees.

Apart from our corporate development outlook, we have seen sustained interest in the Waterfall Logistics Hub. Land parcel 9 south is almost fully developed, land parcel 9 north is anchored by the construction of its first large manufacturing and logistics facility and the large land parcel 24 is being activated to bring onto the market in the near future.


We will shortly launch Waterfall City’s first high-rise residential project as a complementary offering to the residential area and the City as well as new hospitality facilities. We believe that the residential component, as the missing element within the City, will further densify the City and contribute to our Waterfall precinct vision – where living works.

Waterfall’s six core values

Six reasons why Waterfall, where living works, is becoming Gauteng’s business destination of choice:

Waterfall: Where living works

Waterfall spans 2 200ha adjacent to Modderfontein in the east and Kyalami and Sunninghill to the west, creating a large commercial growth node with superb access from Pretoria via the N1, R21 and R55, and from Sandton and Johannesburg via the M1, N1, N3 and R55.

We have two focus areas in the precinct: Waterfall City and Waterfall Logistics Hub.

Waterfall City: An integrated city that works

The heart of the precinct is Waterfall City, with current development bulk of 778 023m2 zoned for retail, office, industrial, hotels and residential developments. Waterfall City is built around the super-regional Mall of Africa and its adjoining 1.3ha Waterfall Park.

The concept behind Waterfall City is to create a mixed-use development where people can work, live and play. The precinct was planned as a greenfield development: allowing for the best urban design principles to determine sufficient and efficient infrastructure, services and open public spaces. Due to all developments being new, the focus is on green design and smart technology.

Waterfall Logistics Hub: Gauteng’s logistics hub of choice

The Waterfall area east of the N1 highway is well positioned for light industrial tenants wanting to capitalise on its central location and accessibility. The Waterfall Logistics Hub (178 985m2 of remaining development bulk) hosts only light industrial tenants, making it an attractive option to consolidate warehousing with sizeable office space, which is the current trend.

Our development rights

We secured the majority of retail, commercial and industrial development rights and will also develop residential units. Development rights are contractual rights held to develop certain Waterfall land parcels, and form a material element of the overall land valuation. In addition to the 957 008m2 (2017: 1.0 million m2) of developable bulk, we share in development rights for two joint ventures with Sanlam. At 30 June 2018, the value of our interest in these joint ventures was R143.8 million (2017: R141.0 million).

Development team
Standing: Enzo Oosthuizen, David Oosthuizen, Martin du Plessis and Nico Barnard
Sitting: Werner Mulder, Miran Naidoo, Giles Pendleton and Linda Meyburgh

Progress in developing Waterfall’s available bulk is shown below:

Our 1.9 million m2 (2017: 1.9 million m2) of total approved bulk is spread across 12 individual land parcels. At 30 June 2018, 23.4% (2017: 18.1%) of available bulk was completed and held, with a further 4.3% (2017: 6.5%) under construction. During the year, we sold undeveloped bulk into joint ventures with the following joint venture partners: Atterbury group, Barrow Properties, Sanlam and Zenprop. The balance is available for future development. In addition, we plan to increase allowable bulk on the land parcels as the spatial development framework of the City of Johannesburg evolves.

Waterfall bulk (%)


  Retail 52 692m2  
  Residential 87 139m2  
  Office 569 856m2  
  Industrial 13 321m2  
  Hotel 55 015m2  
  Total 778 023m2  
  Industrial 178 985m2  
  Total 178 985m2  

The Waterfall bulk is spread over 12 land parcels (LP):

LP number     LP description Main
rights in place
Completed –
Completed –
      Waterfall City                
LP 10     Waterfall City Office 882 760 195 912 56 715 39 300 31 070 559 764  
LP 10A     Corporate City Office 150 000 150 000  
LP 10B     Corporate Campus Office 30 062 3 304 15 000 5 150 6 609  
LP 12     Capital City Office 48 330 48 330  
LP 15     Lifestyle Estate Woodmead Retail 64 944 40 826 24 118  
LP 20     North Office Park Office 4 194 4 194  
LP 21     Landmark Park Office 56 999 43 678 13 321  
Subtotal         1 237 289 283 720 60 909 54 300 60 338 778 023  
LP 3^     Convenience Corner Waterfall Industrial 15 000 15 000  
LP 8     Distribution campus Industrial 184 546 115 396 20 921 2 433 12 858 32 938  
LP 9     Logistics precinct Industrial 196 455 52 701 7 695 7 695 128 365  
LP 22     Commercial district Office 83 544 37 685 28 177 17 682  
LP 24^     Factory depot Industrial 154 250 154 250    
Subtotal         633 795 153 081 101 799 179 378 20 553 178 985  
Total         1 871 084 436 801 162 708 233 678 80 891 957 008  

* Bulk disposed in joint ventures with Sanlam.

Our infrastructure and services

The completion of the K60 will open an east/west dual carriageway across the southern part of the Waterfall development. We are working with all stakeholders, including the Gauteng Department of Transport, to ensure timely delivery of this project. This will provide better access to our developments, as well as additional alternative transport options into the City.

Activities in the reporting period

During the year five buildings and one extension were completed in Waterfall bringing the total South African portfolio PGLA to 802 256m2. Attacq’s attributable share of the total newly completed 118 628m2 PGLA is 103 541m2:

LP number     Practical
Occupancy External
Waterfall City              
PwC Tower~     October 2017 48 613 100.0 1 750 351  
Gateway West     October 2017 13 803 >79.0 370 809  
Waterfall Corporate Campus – phase I+     December 2017 5 868 100.0 169 700  
Waterfall Logistics Hub              
BMW Group South Africa Regional Distribution Centre     December 2017 31 987 100.0 289 401  
Dis-Chem warehouse     October 2017 8 518 100.0 83 329  
Massbuild extension     December 2017 9 839 100.0 78 806  
Total       118 628 >97.0 2 742 396  

~ Attacq has a 75.0% co-ownership.

+ Attacq has a 50.0% co-ownership.

Construction of the new Deloitte head office, with the Mall of Africa in the background, Waterfall City

Developments under construction

The following developments were under construction as at 30 June 2018:

Property     LP Anticipated
value on    
value at
30 June
Waterfall City                    
Deloitte head office*     10 Q3 FY20 21 250 100.0 852 344 –** 141 743  
Waterfall Corporate Campus – building 2*     10B Q3 FY19 3 215 75 827 78 766     21 392  
Waterfall Corporate Campus – Accenture*     10B Q2 FY19 1 932 100.0 53 630 66 494     36 778  
Waterfall Point^ – pre-sold building     15 Q3 FY19 2 339 Pre-sold 56 426 63 185      
Waterfall Point^ – two buildings held for sale     15 Q3 FY19 4 678 Inventory 112 853 141 796     42 484  
Waterfall Point – investment property building     15 Q3 FY19 2 339 56 426 63 391     23 616  
The Ingress – phase 1     10 Q2 FY20 8 731 50.1 241 753 –** 31 075  
Waterfall Logistics Hub                    
Cummins South Africa’s regional office*     9 Q2 FY19 8 116 100.0 108 952 111 701     65 649  
Pirtek^^     8 Q3 FY19 2 926 Pre-sold 29 354 34 200      
Superga/Kappa     8 Q4 FY19 4 657 100.0 42 810 –** 11 968  
Midi warehouse     8 Q4 FY19 5 296 48 685 –** 14 221  
Total         65 479 >75.0 1 679 060 n/a     388 926  

* Values provided above reflect Attacq’s undivided share in the building: 50.0%.

# Estimated PGLA for Attacq’s attributable share of development. Subject to change upon final remeasurement post-completion.

^ The estimated value on completion of pre-sold and inventory is indicative of sales proceeds and not of an external valuation.

^^ Classified as inventory, the estimated value on completion equals the sales value, not externally valued.

** Not externally valued due to early stage of construction as at 30 June 2018.


With seven developments under construction and over 37 000m2 of developments due to be completed in the 2019 financial year and a further 48 000m2 in 2020, Waterfall is a hive of construction activity. Along with site developments, significant infrastructural investment is entrenching Waterfall as a prominent business location in Gauteng. Our sustainability strategy continues to drive the development of green-certified buildings in Waterfall.

Development pipeline

Waterfall City

The Atria – land parcel 10

We have established a 50/50 joint venture with Barrow Properties to develop the Atria, a mixed-use precinct adjacent to the Mall of Africa which comprises four office buildings and a hotel. The initial precinct’s design has been revised, resulting in the removal of the residential component and increasing the hospitality and office components. The total PGLA is estimated at 32 000m2 at an estimated total development cost of R840.0 million. The construction of the super-basement has commenced. Construction of the top structure will be in a phased approach subject to leasing.

Waterfall Corporate Campus Office Park – land parcel 10B

Waterfall Corporate Campus is a 50/50 joint venture with Zenprop, with an approximate total development cost of R870.0 million. The development on completion, will comprise six multi-tenanted office buildings with an estimated total PGLA of 30 000m2. Phase I, building 1 (5 868m2 of PGLA) was completed in December 2017 and is fully tenanted. The construction of phase II, which consists of two buildings and the communal area, will be completed during the second and third quarter of the 2019 financial year. One of the two buildings will be fully tenanted by Accenture SA Proprietary Limited.

The Ingress – land parcel 10

We commenced with phase I of a five building office development known as The Ingress. The development is located adjacent to the Novartis building and across the road from Gateway West on land parcel 10. Phase I comprises two buildings, with building one to be fully tenanted by a financial services company. The total PGLA of phase I will be approximately 8 700m2 and the remainder will be approximately 11 700m2 (20 400m2 in total). Total development cost is estimated at R570.0 million.

The Ellipse – land parcel 10

We intend to roll out residential developments to create a “live, work, play” urban environment in Waterfall City. The proposed inaugural residential development will comprise four towers of approximately 550 residential units on land parcel 10, west of the Mall of Africa. The development will be undertaken on a 50/50 joint venture basis in a phased approach. Phase I will consist of two towers of approximately 250 units. The estimated development cost of R450.0 million for phase I includes infrastructure that will benefit phase II. The commencement of the development is subject to achieving a certain level of pre-sales.

BMW X Lifestyle Park – land parcel 10

We are developing a BMW X Lifestyle Park in Waterfall City for BMW Group South Africa. The park is located on the southern side of the Mall of Africa and comprises a multi-functional event space to be used for promotional events and an off-road track designed to showcase the abilities of BMW’s X models. The initiative will create an additional attraction in the City.

Waterfall Logistics Hub

Zimmer Biomet – land parcel 8

We, in a 50/50 joint venture with Sanlam, commenced post-year end with the development of a warehouse with adjoining offices, measuring 4 000m2 of PGLA, for Zimmer Biomet. The total capital cost for the project is R55.3 million with an estimated date of completion of June 2019. We classified 50.0% of the value of the development rights as well as infrastructure and service costs relating to Zimmer Biomet as held for sale as transfer is pending to Sanlam.

The Ellipse, Waterfall City

Investment in MAS


Over the financial year, our shareholding in MAS reduced to 22.8% (2017: 30.6%) after we elected not to participate in its two large capital raisings. The market value of our investment, using the 30 June 2018 MAS share price of R21.00 (2017: R23.50) equates to R3.1 billion (2017: R3.5 billion). During the year, we received cash dividends of R151.0 million (2017: R105.3 million), representing a 4.9% income return based on the year-end market value.

Our equity accounted investment at 30 June 2018 is R3.1 billion (2017: R2.7 billion). The net increase is due to MAS’ NAVPS increasing by 7.6% from 124.5 euro cents per share to 134.0 euro cents per share plus a 7.1% weakening of the rand against the euro. This was offset by dividends totalling 6.77 euro cents per share paid by MAS in the financial year.

Investment in MAS

MAS is a commercial property investor, developer and operator listed on the main board of the JSE. It is also listed and admitted on the Euro-MTF market of the Luxembourg Stock Exchange.

MAS’ strategy is to generate sustainable and growing distributable earnings per share by acquiring, developing and operating retail, office, industrial, logistics and hotel assets in Western Europe and Central and Eastern Europe. Where exceptional opportunities arise, MAS will embark on mixed-use or residential developments to generate recurring income or capital gains.

Asset prices in Western Europe have increased in recent years and acquisition opportunities that offer an attractive return on equity are more difficult to find. MAS’ focus in Western Europe is now on opportunities that can deliver substantial value through active asset management, development and redevelopment. Although property prices in CEE have increased, attractive opportunities are still available, backed by a combination of relatively high initial acquisition yields, substantial growth prospects and attractive debt terms. Even more appealing is the development market which is supported by rapidly growing purchasing power and, in some cases, suboptimally designed or undersized assets suited to redevelopment or displacement. Accordingly, MAS is expanding into the growing economies of CEE. To facilitate this, MAS has partnered with Prime Kapital Limited, a management team with exceptional development, investment and financing experience in these markets.

1 MAS' share of the income-generating portfolio’s passing rent

Third key value driver: Investment in MAS

MAS’ 2018 performance highlights

  • 7.1% year-on-year increase in European Public Real Estate Association NAVPS to 134.9 euro cents (2017: 125.9 euro cents)
  • 32.0% year-on-year increase in income-generating property (includes investment property held for sale and acquisitions post 30 June 2018)
  • 34.5% increase in net rental income
  • 89.6% increase in net operating income
  • Distribution per share of 7.61 euro cents
  • Prime Kapital development pipeline: 21 000m2 completed, over 634 000m2 under development.

Outlook on MAS

MAS has revised its prior distribution growth guidance for the 2019 financial year of 30.0% to 15.0%. The prior distribution target was premised on being able to actively deploy capital raising proceeds into income-accretive acquisitions and developments. The markets MAS operates in have become progressively more competitive resulting in a slower than anticipated drawdown of available funds.

MAS has a well-funded balance sheet, a strong development and acquisition pipeline and access to an experienced development partner with an exemplary track record in CEE.

MAS as our third key value driver

MAS provides us with a growing stream of euro-denominated distributions, underpinned by a growing portfolio of income-generating properties and a strong acquisition and development pipeline. Melt Hamman will be joining the MAS board of directors in 2019.

Militari Shopping Centre, Bucharest, Romania (acquisition completed July 2018)

Rest of Africa retail investments


At 30 June 2018, our rest of Africa retail investments are held via our:

  • 25.0% shareholding in Gruppo Investment Nigeria Limited, the owner of Ikeja City Mall in Lagos, Nigeria
  • 31.8% shareholding in AttAfrica, which is invested in four retail properties in Ghana and one in Zambia.

At year end, our value in the Rest of Africa retail investments was R1.1 billion, comprising 3.8% (2017: 4.6%) of our total gross assets. In June 2017, the value totalled R1.2 billion and included our investment in The Grove Mall of Namibia, which was sold in May 2018. The proceeds of R191.9 million were used to reduce interest-bearing debt.

At 30 June 2018, our equity accounted investment in Gruppo totalled R305.2 million (2017: R286.5 million). The net increase in investment value reflects the 5.1% weakening of the rand against the US dollar, offset by an impairment of R25.2 million.

Our investment in AttAfrica, through its shareholder loan, was R787.3 million (2017: R776.2 million), being its gross loan of R953.9 million (2017: R908.5 million), net of an aggregate impairment of R166.6 million (2017: R132.3 million). AttAfrica repaid R99.3 million in capital and interest during the year, using funds from the external refinancing of Accra Mall. An impairment of R25.9 million was recognised against the loan in the current year (2017: R82.8 million) due to the increase in the negative net asset value position of AttAfrica. This is annually determined by an external valuation of the underlying properties.

The main drivers of the change in our Rest of Africa retail investments over the review period are shown below:

AttAfrica capital structure

Currently we are not receiving regular cash distributions from AttAfrica, due to unfavourable trading conditions and the capital structure of our investment in AttAfrica. This capital structure, inter alia, gives us a 31.8% shareholding in AttAfrica which is higher than our obligation to contribute 25.0% of the funding requirements and therefore have a share of any capital growth in the underlying portfolio above our capital contributions. Hyprop Investments Limited has first right to operational income flows generated by the portfolio, resulting in irregular cash distributions to Attacq. AttAfrica shareholders are investigating options to create liquidity in the portfolio ahead of the June 2020 shareholder liquidity event. Failing to do so, the existing capital structure will be restructured.

AttAfrica (R million)

AttAfrica (R million)

Gruppo Investment Nigeria Limited (Ikeja City Mall) (R million)

Gruppo Investment Nigeria Limited (Ikeja City Mall) (R million)

Fourth key value driver: Rest of Africa retail investments

Malls and performance

At 30 June 2018, the retail properties in which we have an interest, and vacancy rates were as follows:

          Annual footcount millions Vacancy %  
Asset     PGLA
2018   2017 2016 2018   2017 2016  
Accra Mall, Accra     21 311 15.0 7.2   7.3 6.5 6.8    
West Hills Mall, Accra     28 272 14.3 5.4   5.4 5.6 10.4   5.3 5.0  
Achimota Retail Centre^, Accra     15 534 23.9 5.9   5.0 5.2 1.9   6.1 21.7  
Kumasi City Mall^, Accra     18 604 23.9 6.2   5.9 n/a 13.0   26.5 n/a  
Ikeja City Mall, Lagos     22 223 25.0 7.8   7.8 8.2 3.1   3.4  
Manda Hill Mall, Lusaka     42 002 15.9 10.7   10.8 11.1 4.1   5.4 4.7  

^ Footcount annualised in first-year of trade.

    Data provided at 100% level.

Accra Mall continued to trade well, with vacancies at year end largely due to the departure of Truworths and Identity. Vacancies reduced after year end. Substituting Game as the second anchor at West Hills Mall and Achimota Retail Centre is expected to impact both malls positively once opened in November 2018. This will also result in Shoprite being present in all malls and Game in every mall except Ikeja City Mall. Achimota has settled well since opening in 2016 as evident in lower vacancies and rising footcount. Operating income from Manda Hill Mall in Zambia was impacted by filling vacancies at lower rental levels during the year. While still challenging, trading conditions in Nigeria are improving off the back of moderating inflation, improved oil production and an increase in the availability of foreign exchange.

Management’s focus remains on filling vacancies and tenant retention to optimise net income and asset value.

West Hills Mall, Ghana, Accra