Equites Property Fund CEO Andrea Taverna-Turisan says the group has around R4.2 billion worth of “new activity” in its investment pipeline over the next year, which includes new developments and acquisition opportunities in SA and the UK.
Speaking to Moneyweb on Tuesday following the release of the group’s half-year results to the end of August 2021, another robust set, he was bullish about growth prospects in the booming logistics property market.
Equites, SA’s only exclusively logistics-focused real estate investment trust (Reit), is continuing to invest in the niche sector despite Covid-19 disruptions.
It has weathered the pandemic better than most of its JSE-listed peers that hold more traditional retail, commercial office, and industrial property assets.
Taverna-Turisan agrees the group has had a busy half-year, having raised R1.3 billion in new equity and securing several deals.
On the local acquisitive front one of its bigger deals was with Attacq, involving the purchase of a 50% stake in three properties in Midrand’s Waterfall Logistics Hub for R511 million, including jointly developing a new warehouse for Australian retailer Cotton On.
Equites completed a R291 million distribution campus for Sandvik, let on a 10-year triple-net lease.
The group also secured two development leases for a total value of more than R450 million.
“The first is a R198 million extension to the TFG warehouse in Lords View [Midrand], which will include the installation of a solar PV system and additional upgrades to prepare the facility for an EDGE [green building] certification,” Equites points out in a results media statement.
“The second agreement is for the development of a R256 million flagship distribution facility for Cargo Compass SA in Jet Park [also in Gauteng],” it adds, noting that both these deals are on a 10-year lease.
“Equites plans to invest around R825 million into its development pipeline in SA and R2.2 billion in the UK over the next 12 months. Together with acquisition opportunities, our total investment activity will be around R4.2 billion,” Taverna-Turisan tells Moneyweb.
“The next 12 months will see us sign three more pre-let deals in SA and two buying opportunities. In the UK, we have two pre-let deals being finalised and a few buying opportunities,” he notes.
“Equites has a strong balance sheet, so I don’t think we will be doing any further capital raises for this financial year [ending February 2022].”
The group’s gearing or loan-to-value ratio reduced to 28.6% at the end of its half-year.
This was on the back of its capital raise in July, as well as an impressive 9.4% increase in the fair value of Equites’ investment property portfolio, to R21.1 billion at August 31, 2021.
The Reit declared an interim dividend of 78.38 cents per share, with distribution per share increasing 5.3%. While it is paying out 100% of distributions, it has offered shareholders the opportunity to reinvest dividends.
Many of its JSE-listed peers are still withholding or deferring interim dividends, and even full-year dividends, in order to retain cash and better weather the Covid-19 fallout.
Evan Robins, portfolio manager at Old Mutual Investment Group, says Equites continues to deliver robust results and its management is “more upbeat than most peers”.
“The global modern warehouse industrial sector is in a sweet spot and Equities seems to almost live in another world …
“But industrial is not without headwinds in SA. Indications of continued roll-out of their land developments is positive,” he adds.
Garreth Elston, chief investment officer at Reitway Global, comments: “Equites has delivered a very strong set of results, once again demonstrating the resilience and growth of the logistics property sector.”
He says that while the group’s SA portfolio performance was good, its UK investments “demonstrated just how strong [logistics property] demand is and is forecast to remain” in that country.
“The global logistics sector continues to remain one of the best performing global sectors, with very strong tenant demand and increasing constraints on supply especially in Europe and the UK.”