CAPE TOWN – Equities Property Fund (Equites) has lifted distributable earnings 31.1 percent for the six months to August 31, and dividends increased by 9.3 percent to 74.43 cents over the comparative period.
The growth was largely driven by robust like-for-like rental growth of 7.3 percent.
The share price fell 1.03 percent on Thursday morning to R21.07 on the JSE, but it remains a favoured company in the listed property sector among investors, trading at a healthy premium to its net asset value of R17.37. It later closed at R21.40.
In the five-and-a-half years since listing, the compounded average growth rate of the property portfolio was in excess of 55 percent.
Chief executive Andrea Taverna-Turisan said in an interview that they were happy with the results, and with their focus on high-quality logistics assets, and it appeared from a presentation to shareholders on Thursday that the results had been well received by them.
He said they were comfortable with achieving in the upper half of the previously guided distribution-per-share growth of 8 to 10 percent for the full year.
There were no leases expiring for the remainder of this financial year, currency and interest rate exposures were largely hedged, and second half results usually benefited from rental escalations, he said.
Equites’ logistics assets, let to A-grade tenants on long-dated leases in key logistics nodes, had established the group as a market leader in South Africa, with notable exposure to the UK, one of the most advanced logistics markets in the world.
Taverna-Turisan said holding land and developing to tenants’ requirements was the cornerstone of creating value in the fund.
Developments in the second half were expected to add around 50 000 square metres of letting area and some R550 million to the portfolio value.
“Our developments are managed internally, which has allowed us to drive efficiencies, and by performing property management internally, we stay close to our tenants”, he said.
The fair value of the property portfolio had increased 33.7 percent to R13.5 billion.
The lion's share of this growth was attributable to developments and acquisitions, with a 33.3 percent growth in income-producing gross letting area year on year.
He said the group had “put its best foot forward” in bidding for one of Shoprite’s distribution warehouses, where it was one of more than 20 bidders, and Equites was awaiting the outcome of this process.