New beginnings – a spring view from the CEO

Key Takeaways:

• South Africa’s economic recovery post-pandemic will be slow, with challenges due to pre-existing economic weaknesses.
• Atterbury has shifted its strategy to prioritize stability over growth, ensuring efficient management of its portfolio.
• Cash flow management and tenant support were key focuses during lockdown, resulting in minimal vacancies.
• The property sector must adapt to changing consumer preferences, emphasizing convenience and entertainment over size.
• Atterbury remains committed to resilience and adaptability, with a focus on efficiency and upcoming developments despite economic challenges.

Spring is all about new beginnings, and it’s never been more apt than this year, when South Africans are also adjusting to a freer life again after months in very tight lockdown. The business world and industries across the country have also been picking up the reins to ramp up productivity towards the new normal. Not that the reins at Atterbury have been slack during lockdown. CEO Armond Boshoff reflects on the property development business post COVID-19.

How do you feel about the prospects of recovery in business and the economy in general now that the worst of the pandemic seems to be over?
Although the transmission rate of COVID-19 in South Africa seems to be slowing down, the negative effects on business and the economy will be felt for a very, very long time. The problem is that even before the pandemic hit us, South Africa had been struggling with weak economic growth. In fact, for the three quarters prior to the initial lockdown, our economy declined between 0.8% and 1.8%, quarter-on-quarter. This was before the economy was brought to a standstill. The reality is that it is going to take us a lot longer to “trade” out of this economic hole, compared to other developed countries, due to the deteriorating health of our economy during the past 24 months. So, in summary, I think things will become worse before it gets better unfortunately, and it will take us a few years to get back to steady, sustainable growth, unless something drastic happens from a policy perspective.

The property development and mall-management business must have felt the lockdown keenly. Has Atterbury made any strategy adjustments that you can share?
The effects of lockdown were certainly felt across the property industry by tenants, landlords, developers and financiers. At Atterbury, we continue to narrow our strategic focus to ensure our current portfolio is managed as efficiently as possible and that we roll out our attractive development pipeline as planned. However, the pandemic has certainly shifted our focus, especially in the short to medium term, to ensure stability rather than growth.

What have been the priorities over the past couple of months, how has this been different from what would have been the case without a pandemic; and are you satisfied with the outcomes?
Focusing on managing our cash flow and constructively supporting our tenants (most of whom could not trade for two months or so) was our main priority during the initial lockdown stages. I believe we were very successful in managing our portfolio during the difficult times, in that we had very few casualties in terms of vacancies once the economy gradually started opening up again. Although it remains tough for us as landlords and developers, as well as for our tenants, I would declare the managing of the situation a relative success.

How do you see the “new normal” playing out in the property business for the foreseeable future; at least until a vaccine is found?
I think it will be tough for a long time. Consumers and businesses will remain under pressure, not only due to the negative economic effects of COVID-19, but also due to the weak South African economy in general. I think retail landlords and retailers will need to adapt to ensure that the consumer’s experience is enhanced as far as possible. I think consumers will opt for convenience and entertainment in their retail experience, rather than size. Furthermore, development projects will inevitably take longer to roll out as the economy (hopefully) recovers over time.

Any great upheaval also comes with renewal and valuable lessons learnt. Can you share some of the insights from this period that you will take forward and incorporate into the business?
I realised that sometimes big-picture focus is required and in other instances a more detailed focus is required. The point is that both are equally important, depending on the situation in hand at the time. Adaptability is key. I also realised that Atterbury has a very well-balanced, competent workforce, that can overcome crisis situations by working together. I believe this is a key contributing factor in Atterbury’s success over the past 26 years, and we need to protect and strengthen this in order for us to be successful in years to come.

What can we look forward to seeing from Atterbury in the next six months – where will your focus be at the helm of the company, and what are you looking forward to? Do you foresee permanent changes in the way you do business?
As mentioned above, the main focus for the next six (probably 18) months, will be to preserve and manage cash flow very tightly. We need to ensure that our existing portfolio remains strong and increase the efficiency in the way we manage these assets.

On a more exciting note – I am looking forward to the opening of the Jewel City precinct (a Divercity Urban Property Fund asset in the Joburg CBD) on 24 September and the Castle Gate Lifestyle retail centre in Pretoria on 26 November. We are blessed that we are in a position to open three developments (Richmond Corner in the Western Cape was already opened on 23 July 2020) in these difficult times. We also concluded a number of commercial and industrial transactions relating to both existing and development space. For this we are very grateful, and we applaud the commitment of our staff and associates!