JSE-listed specialist logistics property developer and landlord Equites Property Fund, which has a R1.3-billion development pipeline in progress, is pursuing various development opportunities in South Africa and in the UK.

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 embarked on a low-risk strategy of diversifying into the UK by focusing on premium logistics distribution 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 an 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,” Equites CEO Andrea Taverna-Turisann noted in a statement last month.

In South Africa, the company has further 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, in Durbanville, Cape Town, in the Western Cape, valued at R152-million. The developments boast a combined gross lettable area (GLA) of 14 956 m2, the company noted in a press statement last month.

Equites has a further 31 ha of prime, serviced, industrially- zoned land available for development in Cape Town and in Gauteng, and it 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.

Financial Results
Equites posted its results for the six months ended August 31, last month, with distributions per share increasing 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,” Taverna-Turisann noted last month.

He added that the company’s continued strong financial results reflected its focus on sound property fundamentals, efficient capital management and effective use of operational and financial gearing.

He also noted that Equites had experienced continued demand for modern, well-located logistics facilities as retailers aimed to improve supply chain efficiency and third-party logistics services became increasingly important.

Equites had a fully let portfolio with a weighted average lease expiry of more than seven years; it had 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 GLA, valued at R832-million, during the six months under review.