Industrial sector player Equites Property Fund (Equites) says its promise of more acquisitions which will bring the value of its assets to R4 billion over the next five years is still achievable.
Equites – which listed in June with 17 industrial and office properties valued at R1.2 billion situated largely in the Western Cape – has since then concluded a number of acquisitions.
Its portfolio is now valued at over R1.4 billion. CEO Andrea Taverna-Turisan says the portfolio will grow, as the company is still on the prowl for more opportunities.
“I am super confident that we will get there. I am confident in terms of us achieving our prelisting statement targets,” he told Moneyweb.
Announcing its maiden results for the full year to February 28, the company – with a market capitalisation of R1.4 billion – revealed that it has made four acquisitions valued at R118.8 million.
It acquired a distribution facility in Milnerton, Cape Town for R42 million, a remaining 50% state of the Execujet hangar at the Cape Town International Airport for R46 million, a 1.3-hectare property in Epping Industria for R18.1 million and a property in Bellville for R12.6 million.
Despite the company’s intention to grow its property portfolio, Taverna-Turisan notes that the market is competitive in terms of lucrative opportunities.
“There are opportunities, but there is lots of completion. Most of the competition comes from the private sector…There are a handful of private operators that we compete with. The market for distribution boxes is there and we don’t see that demand subsiding soon,” he says.
The company is looking to diversify away from the Western Cape by growing its exposure in high-growth provinces like Gauteng. It is slowly realising this target, as it recently announced that it will develop a 22 227-square metre distribution warehouse for the Foshini Group in Lords View Industrial Park, Midrand. This is a joint venture between Equites and the owners of Lords View Industrial Park which is valued at R150 million.
The counter’s industrial sector strategy has been in the past supported by industry players. The industrial sector is considered as the best performing sector and continues to hold up well in light of economic headwinds.
According to the 2014 IPD South Africa Annual Property Index, the best performing sector in terms of property returns for the year was industrial, netting total returns of 14.1%. The industrial sector performs well in Equites’ portfolio, as it shows no vacancies while vacancies for office properties stand at 6.6%.
In its maiden results for the period, Equites reported distributions to shareholders since listing of R69.9 million, which constitutes a R3.4 million or 5.1% increase on the pre-listing forecast. Since its listing the company declared dividends per share of 61.3 cents, equating to a distribution yield of 8.2%.
Its loan to value remained low at 8.2%, which Taverna-Turisan says was due to the R650 million capital raised by the company’s listing.
“We have an extremely strong balance sheet which is putting us in a position to engage with people to do deals to the benefit of the fund,” he says.
Equites shares closed 2.33% down at R12.60 on Wednesday.