Equites Property grows portfolio
Property fund buys Gauteng distribution centre that has a long lease with Simba
Equites Property Fund has made its largest acquisition since listing, having bought a distribution centre for nearly half-a-billion rand, pushing its asset base to close to R12bn.
Equites Property Fund has made its largest acquisition since listing, having bought a distribution centre for nearly half-a-billion rand, pushing its asset base to close to R12bn.
Equites, the only industrial property-focused fund listed on the JSE, said the property had a long lease in place with consumer goods group Simba. The Gauteng distribution centre was bought for R461.9m from Investec Property Fund.
Distribution centres and high-tech warehouses are the most sought after property assets in SA, with companies wanting to benefit from future growth in online shopping and also wanting to sign up groups who are trying to establish supply chains.
Following the deal, Equites will have grown its asset base more than 11-fold since listing with only R1bn in assets in June 2014. It has been one of the most aggressive property funds over this period, investing across SA and the UK.
This growth has been accompanied by steady share price increases of 32% in 2017, nearly 24% in 2016 and close to 16% in 2015. Year to date, its price is down about 9%.
Equites has also achieved strong income growth and grew its distribution per share for the year to February by 12.2%. Equites invests in premium distribution centres, let to tenants with long-dated triple net leases. These leases assign sole responsibility to the tenant for all costs related to the management of the asset being leased.
Equites CEO Andrea Taverna-Turisan said the group had bought the distribution centre at a relatively large premium, but in 2020 the asset would become highly profitable.
“We have acquired an exceptional asset that comes with a very attractive tenant in Simba,” he said.
Simba had been the main tenant at the centre, which is situated on a 101,769m² site in Elandsfontein, Germiston, since November 2017 when it signed a 10-year lease.
IPF said the asset was bought at an exit yield of 7.0% and represented a R25m, or 5.7%, premium to its current book value.
The company said that the disposal would enable it to decrease its debt.
Taverna-Turisan said he was confident that Simba would be retained as a tenant. This was because the asset was in an attractive Gauteng location and it met Simba’s warehousing specifications, which included high ceilings.
“I’d be shocked if they didn’t lease this facility for at least 20 years. It is situated in one of SA’s premier logistics nodes, Germiston, and affords access to exceptional road networks and is close to OR Tambo International Airport,” he said.