Equites expects higher distributions per share next year

Equites Property Fund is cashing in on strong demand from retailers and third-party logistics providers with low vacancies and soaring rentals driving the group’s performance.

The specialist owner and developer of prime logistics assets in SA and the UK reported an 8.9% rise in distributable earnings to R1.12bn for the year to end-February.

The industrial property sector delivered total returns of 13.2% over the past year — the highest in the property sector — driven by strong investor demand and rental growth, with Equites keeping pace with the sector’s outperformance.

It declared a final dividend of 67.42c per share, which together with the interim dividend of 66.5c, brings total distributions for the year to 133.92c, 2.1% higher than a year ago.

The distribution was at the upper end of its previous guidance of 130c-135c and was expected to grow further in the 2026 financial year.

Gross property revenue jumped 71.4% to R4.25bn.

The group also strengthened its portfolio with a 16,721m² facility at Jet Park, let to Spar Encore, completed in March last year. With strong demand, the remaining land was set for development within 18 months, it said.

It invested R195m in upgrades to Shoprite’s Centurion facility and completed two major Shoprite projects: a R1.2bn, 80,531m² facility in Wells Estate; and a R1.3bn logistics campus in Riverfields — both secured with 20-year leases, it said.

However, there was a shortage of industrial space due to a lack of appropriately zoned and serviced land, and developers faced prohibitive funding costs, the group said.

The property portfolio delivered like-for-like rental growth of 5.9% over the period and valuations increased by 6%.

The SA portfolio has a weighted average lease expiry (Wale) of 14.1 years and has no vacancies.

Equites’ UK portfolio delivered strong rental growth over the period, with three assets undergoing rent reviews, resulting in increases of between 19% and 69%.

The UK portfolio has a Wale of 13.1 years, with only a single ancillary unit, representing 1.5% of the UK portfolio, vacant at end-February.

With the assets it has invested in the UK — 14 developments worth more than £450m that peaked at £550m — the group has created value over nine years.

The group has already sold seven UK assets and is exploring the sale of the rest to reinvest in SA. The move aims to reduce the loan-to-value (LTV) ratio and fund ESG-compliant logistics developments, enhancing long-term shareholder value.

During the year, the group signed six power-purchase agreements, which will generate revenue in the 2026 financial year.

The group cut its LTV from 39.6% to 36.0%, despite spending R1.5bn on construction and development in  the 2025 financial year.

The board expects the dividend per share to increase at an above-inflation rate within a target range of 5%-7% to about 140.62c-143.29c. This was based on the strong tenant base, the completion of several large-scale developments and the certainty of overheads, it said.

Equites CEO Andrea Taverna-Turisan said: “Equites is focused on assets with income certainty and annual escalations to support distribution growth. FY25 like-for-like rental growth reached 5.9%, a level the group expects to stabilise. With tight cost and debt management, it aims to deliver distribution growth above inflation over the long term.”

Update: May 15 2025
This article has been updated throughout.

mackenziej@arena.africa
majavun@businesslive.co.za