JSE-listed specialist logistics property developer and landlord Equites Property Fund’s distributions a share for the six months to August 31, increased by 12.02% year-on-year to 60.98c, which is at the upper end of the company’s guidance of 10% to 12% distribution growth for the 2018 financial year.
Equites is confident of meeting or slightly exceeding guidance for the full year if stable macroeconomic conditions prevail.
“Modern logistics properties, as an asset class, have proven their resilience and we continue to see strong demand in major logistics nodes. Equites has positioned itself as a low-risk, high-growth fund in this top performing sector,” Equites CEO Andrea Taverna-Turisann noted in a statement on Thursday.
He added that the company’s continued strong financial results reflect its focus on sound property fundamentals, efficient capital management and effective use of operational and financial gearing.
He also noted that Equites has experienced continued demand for modern, well located logistics facilities as retailers aim to improve supply chain efficiency and third-party logistics services become increasingly important.
Equites had a fully-let portfolio with a weighted average lease expiry of more than seven years, as well as no material negative reversions or defaults in the period, despite tough economic conditions, Taverna-Turisann said.
The company completed developments that total 68 916 m2 of gross lettable area (GLA), valued at R832-million, during the six months under review.
Equites completed a 3 280 m2 speculative development in Meadowview, Gauteng, which is let to Imperial Managed Logistics on a three-year lease. It also completed the 28 527 m2 distribution centre and head office for Röhlig-Grindrod, also in Meadowview. This property is let to the tenant on a ten-year lease.
The company further completed a 17 598 m2 distribution centre and head office for Puma South Africa in Equites Park, Atlantic Hills, in Durbanville, Cape Town, which is let to the tenant on a ten-year lease.
Equites has a R1.3-billion development pipeline in progress.
The company has concluded a development lease for a 15 155 m2 modern logistics facility and offices for Premier, valued at R165-million, and has embarked on three speculative developments at Atlantic Hills, valued at R152-million and which have a combined GLA of 14 956 m2.
The company has a further 31 ha of prime, serviced, industrially-zoned land available for development in Cape Town and Gauteng and is pursuing various opportunities for distribution centres on these parcels of land.
The company has, meanwhile, concluded transactions to sell three noncore office buildings, in Cape Town, as well the small office previously occupied by Puma, for R234-million. Equites expects to dispose of its last two remaining office buildings soon.
STRATEGY
Equites’ local growth strategy is focused on the development of high-quality assets on its vacant industrial land in strategic nodes, as well as on acquiring logistics facilities that meet its strict investment criteria either as individual assets or as portfolio acquisitions.
The company has also embarked on a low-risk strategy of diversifying into the UK by focusing on premium logistics distributions centres in key logistics nodes, which are built to institutional specifications and let to investment-grade tenants on long-dated, upward-only leases.
In line with this strategy, Equites has completed three acquisitions of high-quality logistics assets to date. The acquisitions comprise 15.6% of the total portfolio by rentable area.
The company has also concluded a further agreement to acquire a distribution centre in Coventry for £41-million.
“To be a globally relevant logistics property fund, we will continue to pursue opportunities to develop and acquire logistics properties or portfolios that meet our investment criteria in South Africa and the UK,” Taverna-Turisann said.