Johannesburg - Equites Property Fund is set to be listed in the industrial and office real estate investment trusts (Reits) sector of the JSE next week.
The Western Cape-based fund expects to list 95.5 million shares on the JSE on June 18 and, assuming all its post-listing acquisitions are finalised, will have a portfolio of 17 industrial and office properties valued at R1.2 billion.
Prior to its listing, it plans to raise between R400 million and R650m through a private placement of between 40 million and 65 million shares at an indicative price of R10 a private placement share. The private placement opened yesterday and closes today. The results will be published tomorrow.
Equites owns a portfolio of eight industrial properties valued at R731.9m with a gross lettable area of 82 793m2, all of which are in the Western Cape.
The fund has entered into transactions to acquire a further nine properties in the industrial and commercial sectors valued at R442.3m with a gross lettable area of 41 459m2.
Its pre-listing statement said it had acquired the portfolio from the vendors for a sum that would be predominantly settled through the issue of Equites shares. The vendors would retain beneficial interests in more than 50 percent of the issued shares of Equites.
The fund is internally managed and will specialise in the industrial sector of the property market but have selective exposure to office property.
It added that its board was cognisant of the difficulty a new, relatively small, Reit would encounter if its growth strategy was entirely dependent on buying assets on the competitive open market. A key part of its strategy, therefore, would be to use its development expertise to unlock value.
Andrea Taverna-Turisan, the chief executive, said yesterday that it was targeting to grow the portfolio to R4bn within five years.
He said that the properties in the portfolio were situated in prime locations, had low vacancies with occupancy in excess of 97 percent and at least 77 percent of the portfolio had leases for longer than three years, with healthy escalations averaging 8.1 percent.
Major tenants included Simba, Foschini, ExecuJet, Digistics, Imperial, Puma, UTI (Adidas), Avery Dennison, CourierIT, Kuehne + Nagel, NGK Ceramics, Dole Food Company and Barloworld.
Taverna-Turisan said the executive team had a proven track record and development expertise and would undertake greenfields development of land and brownfields development by upgrading existing buildings.
He said the fund had an attractive pipeline of significant A-grade industrial developments.
The fund planned to expand into prime logistics zones in Gauteng and the greater Durban area over the medium term.
The fund does not intend to acquire properties in secondary destinations outside these three metropolitan areas.
He added that with gearing low, at 8.3 percent, there was scope for the fund to make significant yield-enhancing acquisitions financed with debt funding.
Based on the assumption that it would raise R600m in the private placement, the fund said it was forecasting distributions a share of 66.3c for the year to February 2015 and 59.6c for the year to February 2016.