One Of SA’s Largest Malls ‘Mall Of Africa’ Has Been Devalued By Over R1 Billion! Mall of Africa – South Africa’s sixth largest shopping centre and JSE-listed Attacq’s trophy property asset – took a valuation hit of over R1 billion in 2020. According to Moneyweb, Attacq, together with many of the other major super-regional mall (over 100 000m2 in size) owners like Hyprop, Liberty Two Degrees (L2D) and Accelerate, have seen significant devaluations in prime retail assets.
For its full-year ending 30 June 2020, the group took a devaluation hit of around R1.7 billion. Most of this came in the second half of its financial year (January-June 2020), which was when the Covid-19 pandemic and related lockdowns hit the country. “Given continued market uncertainty from the ongoing pandemic, valuations across all asset classes are therefore reported based on a ‘material valuation uncertainty’ as per professional valuation guidelines. Consequently, a higher degree of caution should be attached to valuations provided than would normally be the case. The Covid-19 impact on valuations is evident in long-term vacancy rates and rental reversion rates that were negatively adjusted to factor in current and forecast market conditions, while capitalisation rates for completed building valuations at 31 December 2020 were mostly static.” the group noted in its interim results presentation.
Attacq Chief Operations Officer and incoming CEO Jackie van Niekerk told Moneyweb that, “We are already seeing a recovery in shopper numbers as well as rental collections. Even on the letting side we are seeing demand in the midst of Covid-19 currently, having secured new tenants for Mall of Africa such as Doppio Zero, Hugo Boss and Gap.”
“The newly let space in our retail portfolio is a testament to the quality of Attacq’s retail assets and demand from retailers … Mall of Africa had 3 272m2 of unoccupied GLA at the end of our interim period, but since then we have let more than 1 300m2.” van Niekerk pointed out.
The pandemic has dealt a major blow to commercial property valuations, as rental income and rent reversions have come under pressure from lockdown restrictions to trade, fewer shoppers at malls, and retail landlords having to give millions of rand in rent relief to the most hard-hit tenants.