Equites rewards loyal investors for sticking by

Equites Property Fund, the SA and UK industrial real estate specialist, is rewarding investors who stuck with the stock since it listed nearly four years ago.

The fund grew its distribution per share for the year to February 12.2% to 123.86c and its property portfolio expanded 30% from R6.2bn to R8.1bn over the same period, annual results showed on Thursday.

The company’s share price has been trading at about R20 over the past weeks, meaning it has more than doubled since it closed after its maiden day of trading at R10.75 in June 2014.

However, “at a share price of R20.59, which was Wednesday’s closing price, the counter was trading at demanding forward yield and premium to net asset value”, said Mvula Seroto, an investment analyst at Catalyst Fund Managers.

Equites is the only specialist logistics property fund listed on the JSE. It owns various warehouse type properties in SA and the UK and services blue-chip companies’ distribution needs.

“The track record of strong distribution and net asset value growth has catapulted the company to be a top-performing real estate investment trust, when measured by its annualised total return of 26.1% a year over the past three years, significantly more than the listed property sector,” said CEO Andrea Taverna-Turisan.

Net asset value per share climbed 8.7% from R14.12 to R15.36 during the reporting period, supported by considerable yield compression in logistics assets in the UK.

Taverna-Turisan said 84% of the group’s R540m revenue generated during the reporting period came from South African assets and 16% from the UK.

Kelly Hook, investment analyst at Metope, said Equites’ results were in line with expectations, “given that they led the market to the top end of their earlier guidance of 10% to 12% dividend growth”.

Equites was one of the more expensive local property stocks on the JSE, trading at 7% clean forward yield.

“So I definitely would not consider it a value play, although for investors seeking quality growth it is a good pick,” said Hook.