Equites Property Fund boosts returns on the back of industrial assets

Equites Property Fund CEO‚ Andrea Taverna-Turisan‚ said that “the continued strong financial results are a reflection of persistent demand for modern‚ well-located‚ logistics facilities.

A strong performance from its industrial warehouse portfolio and other buildings used by the logistics industry, boosted the interim dividend by 20% to 54.44c at JSE-listed Equites Property Fund.

Equites CEO‚ Andrea Taverna-Turisan‚ said that “the continued strong financial results are a reflection of persistent demand for modern‚ well-located‚ logistics facilities and the company’s focus on institutional tenants and sound property fundamentals.”

He said the company is aiming to have a property portfolio that is 25% offshore and 75% local. Equites has achieved rapid growth in its property portfolio‚ from R1bn at listing in June 2014 to R5.9bn in just over two years.

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Equites created a strategic partnership with listed group Attacq to pursue industrial developments‚ initially resulting in the acquisition of eight completed industrial properties for R733m at Waterfall City‚ Midrand‚ at an acquisition yield of 8% and an average lease expiry profile of 8.4 years.

It also acquired a Tesco distribution centre in Hinckley‚ England for a purchase consideration of £28m at an acquisition yield of about 7.2%‚ based on the first year’s rental income of £2.016m. The property is located in a strategic position in the Golden Triangle‚ which is the logistics hub in the United Kingdom. There are seven and a half years remaining on the lease with Tesco.

Equites acquired a 20‚410m² distribution centre in Trentham Lakes‚ Stoke-on-Trent‚ UK‚ which is let to Amazon on a 10-year lease that commenced in July 2016. The acquisition yield was about 6.14%‚ based on the first year’s rental income of £1.044m. The property is in the centrally located Midlands‚ which benefits from continued strong demand from logistics users in the UK.

The company had previously forecast full year distribution growth for the year ended 28 February 2017 to be 10 – 12% higher than the previous financial year. But the company has now revised its full year distribution growth forecast to 12 – 14% higher than the prior year, given the better than expected trading performance and yield accretive acquisitions concluded in the United Kingdom.

Taverna-Turisan concluded: “We see strong demand for further development leases on our existing land and will continue to pursue opportunities to acquire logistics properties that meet our investment criteria locally and in the UK. This should continue to provide robust growth to the portfolio value, as well as the distributions.“