Real estate investment trust Equites Property Fund has concluded an agreement to acquire a 40 428 m² distribution centre, let to Simba, from Investec Property Fund for about R461.9-million.
The transaction is estimated to be effective from November 1, 2018.
As logistics properties of this nature and quality rarely come to market, Equites on Monday said it is pleased to have acquired this “well-located, high-quality, modern logistics facility, occupied by an A-grade tenant on a fully repairing and maintaining lease that is long-dated and consistent with the lease expiry profile that Equites targets”.
Contractual annual rental escalation is above inflation at 7.5%.
The acquisition of the high-income producing property enhances the company's existing real estate portfolio and is expected to result in enhanced returns over the medium to long term, the company added.
Therefore, Equites elaborated, the transaction is consistent with Equites’ stated growth and investment strategy of focusing on premium "big-box" distribution centres, let to investment grade tenants on long-dated "triple net leases", in proven logistics nodes and built to institutional specifications; and building a high-quality logistics portfolio in both South Africa and the UK, comprising properties with predictable rental growth profiles that promote capital growth and increase income returns over the medium to long term.
However, the transaction is subject to outstanding conditions precedent, which include Equites confirming that it is satisfied with the result of its due diligence investigation, as well as the approval of the competition authorities and general conditions considered ordinary in the course of property transfers.