Equites Property Fund increases distribution, eyes further growth

Equites Property Fund, whose tenants include SA retailers such as Shoprite, says its focus on blue-chip tenants with long leases has paid off during the Covid-19 pandemic.

The logistics-focused property fund collected almost all of its rent, as well as raising its payout to shareholders.

The pandemic has sent waves through the property sector as many landlords provided rent relief, or saw tenants rethink their requirements as staff worked from home.

Logistics, storage and warehousing, however, has been in demand amid an acceleration in online activity, forcing retailers to boost their e-commerce offering or risk losing market share.

Equites said yesterday it expected to continue to benefit from a trend towards online sales, after raising its total distribution for its year to end-February by 2.4% to 155c, equivalent to a R975m payout.

The majority of its tenants remained operational during the pandemic, Equites said, with average rental collection rates for the group’s 2021 year at 99.3% in SA and 100% UK.

Equites listed on the JSE in 2014 with a clear focus on high-quality logistics assets, and the value of the portfolio has grown from R1bn then to R19.3bn up to the end of February. Equites generates about three quarters of its revenue from tenants in SA.

The value of the portfolio fell 5.2% in SA during its year to end-February, but grew 5% in the UK, or by 9.7% when including the effects of a weaker rand.

The group provided R42m in short-term cash flow relief, mostly in SA, but saw no tenant defaults and of the 31 who received rent deferrals, “most have since turned the corner”.

Equites said it expected to achieve 5%-6% distribution growth a share for its 2022 year, with an improving economic backdrop in both SA and UK.

Retail trade has rebounded to 2019 levels in some economies, while other sectors reliant on human interaction, such as tourism and inperson retail shopping, remain subdued, the group said.