Equites posts high div­i­dend growth

Business Day - - FRONT PAGE - Alis­tair An­der­son Prop­erty Writer an­der­sona@busi­nesslive.co.za

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.”

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