Equites posts high dividend growth
Equites Property Fund, which owns industrial property in SA and the UK, has impressed investors yet again with financial results that show double-digit dividend growth, while its peers have struggled to keep up with inflation.
Equites Property Fund, which owns industrial property in SA and the UK, has impressed investors yet again with financial results that showed doubledigit dividend growth while its peers have struggled to keep up with inflation.
In the six months to August, Equites grew its dividend 11.7%, due to strong rental growth, sound management and a number of well-timed acquisitions.
The real estate investment trust has been a hugely successful listing since it joined the JSE in June 2014, expanding its assets from R1bn to R10.1bn over that time, and achieving an annualised total return of 24.8% each year. It has also expanded into the UK , with its investments there making up about 20% of its annual revenue in the reporting period.
CEO Andrea TavernaTurisan said he had nearly realised his vision of owning high-end distribution centres only. This was on track as the firm had five office buildings and small industrial properties to sell in the next 18 months.
The board approved an interim dividend of 68.12c per share for the six months to August. The net asset value per share rose 9.5% to R16.67 in the period compared with a year ago. The company, which is the only group solely invested in industrial assets that is listed on the JSE, reported 49% growth in the fair value of its property portfolio, from R6.8bn to R10.1bn.
Distribution centres and high-tech warehouses, which are classified as prime logistics assets, are among the most sought-after property assets in SA, with companies wanting to benefit from future growth in online shopping.
Taverna-Turisan said prime logistics assets had outperformed retail and commercial property, with strong demand being driven by the growth in ecommerce and retailers improving efficiencies through distribution networks.
“This is the hottest property sector in the world. A wall of cash is leaving retail property and going to logistics. We haven’t seen such a notable restructuring of commercial property since the late 1960s when people started to build shopping centres for the first time,” Taverna-Turisan said.
While 20% of retail sales in the UK are online, only 1% of retail sales in SA are online, he said. This suggests there would be scope for Equites to build assets in SA in the future.
Vacancies fell to 0.2% from 2% at the end of the year following the letting of a logistics property at Cape Town International Airport.
“They are offering predictable income growth from a wellmanaged portfolio,” Sanlam Private Wealth equity analyst Richard Colburn said.
“I would say they are best of breed when it comes to logistics property owners.”