Equites Property raised R1.015 billion in heavily oversubscribed book build
Equites Property Fund Limited announced its unaudited consolidated interim results for the six months ended 31 August 2017.
- 12.02% increase in distribution per share
- Developments totalling 68 916 m2 of GLA with a capital value of R832 million completed during the period
- Fair value of investment property increased by 8.58% to R6.8 billion
- Net asset value per share increased by 7.4% to R15.22 during the period
- Inclusion in SAPY20 in June 2017
- Construction commenced on new R165 million Premier distribution centre at Lords View contributing to a total pipeline of R1.3 billion at period end
- Concluded agreement to acquire a distribution centre let to global logistics leader Kuehne + Nagel Limited ("K+N") (in Coventry (UK) for £41 million
- Raised R1.015 billion in heavily oversubscribed book build in August 2017 reducing LTV to 19.8%
Commentary on results
Equites' portfolio continued to perform very well during the period, which translated into a 12.02% growth in distributions per share when compared to the corresponding financial period, to 60.98 cents per share. Vacancies reduced to 0% during the period and for the first time the portfolio is fully let. This is testimony to the quality and resilience of the Company's assets, given the context of the challenging SA economic environment.
The healthy results were underpinned by:
- strong contractual escalations averaging 7.95% across the SA portfolio;
- benefits of increased scale whilst containing administrative costs;
- a further reduction in already very low vacancies to 0%;
- no material reversions experienced on renewals; and
- savings in finance costs following the R1.015 billion accelerated book build in August 2017.
The Company's continued strong financial results are a reflection of its focus on sound property fundamentals, coupled with efficient capital management and effective use of operational and financial gearing. Rental growth is supported by continued demand for modern, well located, logistics facilities as retailers aim to improve supply chain efficiency and third party logistics services become increasingly important. The Company has not suffered any material tenant defaults or downward rental reversions, despite a weak economic environment.
Completion of DSV acquisition
On 2 November 2016, the Company concluded a forward commitment to acquire a 19 511 m2 distribution centre that was being developed by Prologis in Stoke-on-Trent, England. The distribution centre was pre-let to DSV UK for a 10 year lease term commencing on completion. The development was completed on time and in line with the budget and Equites took full ownership of the property on 29 June 2017 against payment of the purchase price of £18.1 million.