Equites moves with the times

Property fund taps into opportunities presented by internet and shift towards online retail

LISTED specialist industrial property developer and landlord Equites Property Fund is tapping into opportunities presented by changing consumer behaviour brought about by the internet and the shift towards online retail.

Andrea Taverna-Turisan, the chief executive of Equites, said yesterday that the story of the fund was linked to the internet phenomenon, which had influenced how people shopped.

“I believe that phenomenon has not taken off yet in South Africa, but if you only amplify what will happen in the next 10 years, we want to be on that bandwagon,” he said.

Taverna-Turisan said Equites had a total of 137 000 square metres in its industrial property portfolio, all of which, apart from 11 000m related to distribution.

He said the intention was for Equites to remain in that space. The fund and the owners of the Lords View Industrial Park in Midrand concluded a joint venture agreement in terms of which Equites will develop a 22 227m distribution warehouse in the industrial park at a cost of about R150 million for The Foschini Group (TFG).

Taverna-Turisan said the TFG warehouse was predominately for the @Home part of their business and Equites had to create an area for customer pick-ups.

“That (online retail) element is feeding through already in small parts and we know our competitors have just picked up (a) warehouse for Takealot near (the) airport in Pomona,” he said. Takealot is the online retailer that recently merged with Khalahari.com.

Taverna-Turisan said the entire portfolio of Equites was currently in Cape Town, apart from the land in Midrand for the TFG warehouse.

Acquisitions

But Taverna-Turisan said the TFG warehouse development had “created a bit of fanfare” and led to the fund starting to talk to other people about opportunities in the Johannesburg market, which as the economic capital of South Africa was a key market and of great significance to Equites.

The fund acquired four further properties in the year to February with a capital value of R118.8m and its portfolio now comprises 21 properties worth R1.416bn. These acquisitions did not include the acquisition of 14.4 hectares of prime vacant industrial land at the Cape Town International Airport for R142.2m, which is still subject to certain conditions precedent.

Equites yesterday reported total distributions to shareholders since listing on the JSE in June of R69.9m to exceed the fund’s prelisting forecast by 5.1 percent or R3.4m despite 5 million more shares being issued than in the original forecast. It declared a dividend of 61.3c, which equates to a distribution yield of 8.2 percent for nine months to February.

Taverna-Turisan said Equites had delivered on all the transactions and profits forecasted for this year in the prelisting statement.

He believed the weighted average escalation of 8.1 percent for Equites’ existing property portfolio should support distribution growth on an annualised basis at the upper end of the 7 percent to 8 percent expected for the listed property sector as a whole.

Shares fell 2.33 percent R12.60 yesterday.

to PAPER and packaging maker Mondi’s first-quarter operating profit rose 29 percent on higher sales, lower input costs in its main European market and increased selling prices in Russia and South Africa, the company said yesterday. The company said contributions from capital projects and acquisitions also helped boost its underlying operating profit to 236 million (R3.2 billion) for the three months to March compared with 183m in the corresponding period a year ago. Mondi, which is also listed in London, said the returns were 9 percent above its 2014 fourth-quarter operating profit of 216m. The company said on a like-for-like basis, sales volumes were up across most businesses on both the comparable prior year period and the previous quarter. The strengthening of the dollar versus the euro provided a net benefit to the company which also makes office paper and cement bags, partly through dollar-denominated sales. The cost of wood, recycling paper, resin, energy and chemicals were all lower than the comparable period, Mondi said, but warned that inflationary pressures in some of the emerging markets where it operates were expected to increase. “In addition, the recent recovery in the oil price is expected to negatively affect the cost of energy, resin and chemicals,” it said. The global price of oil has risen, supported by bets that US crude stockpiles will fall. Shares on the JSE rose 7.49 percent to R261.75. – Reuters

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