File picture: James White
JOHANNESBURG - Equites, the listed property fund, has agreed to acquire a distribution centre from Investec Property Fund (IPF) for R461.9million.

The fund said yesterday that the 40428m2 distribution centre was located on a 101769m2 site in Elandsfontein in Germiston.

It said it was let to Simba, part of the international stable of PepsiCo, the second-largest food and beverage business in the world, on a 10-year lease that commenced in November last year, with an option to renew on expiry by another five years.

Effective

Equites said the contractual annual rental escalation was above inflation at 7.5percent, and the estimated effective date of the transaction was November 1 this year.

The fund added that logistics properties of this nature and quality rarely came to market, and it had targeted key logistics nodes in Gauteng, Cape Town and Durban as its areas of focus in South Africa.

It said the acquisition of the property added to its high-quality property portfolio in Gauteng.

“The addition of this high-income-producing property enhances the company's existing real estate portfolio and is expected to result in enhanced returns over the medium to long term,” it said.

Equites said the transaction was consistent with its growth and investment strategy.

In terms of this strategy, Equites’ focus was on premium “big-box” distribution centres, let to investment-grade tenants on long-dated leases in proven logistics nodes and built to institutional specifications and on building a high-quality logistics portfolio in South Africa and the UK, consisting of properties with predictable rental growth profiles that promotes capital growth and increasing income returns over the medium to long-term.

The transaction was subject to a number of conditions, including a satisfactory due diligence investigation by Equites and the approval of the competition authorities.

IPF said the purchase price reflected an exit yield of 7percent and represented a 5.7percent, or R25m, premium to the current book value of the property, assuming the disposal was effective from November 1.

Shares in Equites closed 0.31percent lower on the JSE at R19.12 yesterday, while IPF shares ended the day 0.67percent lower at R14.90.

-BUSINESS REPORT