Equites Property Fund is accelerating its investment in South Africa’s logistics sector after selling five UK properties, marking a significant shift in focus. The company has spent R600 million on developments and acquisitions in the six months to August, targeting the local market.
Financial Performance and Growth
Distributions per share increased by 5.1% to 72.57 cents for the half-year, supported by a 5.3% like-for-like rental growth in the South African portfolio. The net asset value (NAV) per share also rose to R17.43. Equites reaffirmed its full-year distribution growth guidance of 5%-7%, aiming for 147.7 cents to 150.5 cents per share.
The sale of UK properties reduced the loan-to-value ratio from 35.1% to 28.1%, providing R2.9 billion in cash and undrawn facilities for future investments. The company is divesting from the UK due to high acquisition and development costs, focusing instead on South Africa’s better returns and a R2.4 billion investment pipeline.
UK Exit and South African Focus
CEO Andrea Taverna-Turisan cited raised UK gilt yields and subdued rental growth as reasons for the UK exit. The company has three UK properties left to sell, including DHL Leeds, which is expected to be sold within the next 12 months. A rent review increased the property’s base rent by 53% to £98.71 per square metre.
In South Africa, demand for logistics space is driven by retailers modernizing distribution networks, third-party logistics operators expanding fulfillment capacity, and consumer goods companies seeking efficient facilities. Equites has seven developments underway with a combined capital value of R2.4 billion on completion and R1.3 billion remaining to be spent.
These projects, prelet to tenants like Tiger Brands and Takealot, are expected to generate yields on cost of 8%-9%, above the group’s marginal cost of debt. Completion is scheduled between September 2026 and August 2027.
Sustainable Investments and Future Plans
Equites is also investing in solar power and water infrastructure. Installed solar capacity of 28.2MW covers 75% of its properties, and a water-reuse facility at Riverfields is set to operate in the second half of the 2027 financial year.
Taverna-Turisan emphasized the company’s development track record, stating it continues to create growth opportunities. Equites plans to use its balance sheet capacity to fund growth, gradually restore gearing, and sustain distribution growth.
