Equites developed DSV logistics facility in Cape Town. The sale of 5 of its UK portfolio of logistics facilities means it will now focus on is South Africa assets.
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JSE-listed Equites Property Fund has sold its five UK distribution centres to an ICG Real Estate fund, part of London Stock Exchange-listed global asset manager ICG, for £200.5 million (R4.47 billion).
Equites, which focuses on premium logistics and industrial properties, said in a statement Wednesday that the transaction repositioned the company to focus on its South Africa portfolio, and the five high-quality distribution centres were sold at a value that equated to a transaction yield of 5.5%.
“This transaction marks a decisive step in Equites' capital recycling strategy, releasing about £95.5m (R2.1bn) of cash to be redeployed from a mature UK portfolio, into the higher yielding South African development pipeline over time,” the company said.
The transaction would materially strengthen Equites’ balance sheet by reducing the loan-to-value (LTV) ratio and enhance the growth profile of distributable earnings over the long term, it said.
“The Equites board continuously evaluates its portfolio and applies a range of investment criteria against every property… Following a comprehensive strategic review, the board resolved to dispose of the UK portfolio in its entirety,” the company said.
This would reposition Equities around its core South African logistics platform, where Equites “holds a clear competitive advantage and a deep pipeline of value-accretive opportunities.”
The board said the transaction would crystalise the value created in the UK portfolio since Equites entered the market in 2016.
The proceeds would be redeployed into Equites’ South African development pipeline, which includes pre-let development agreements with blue-chip tenants on long-term leases, and which is expected to enhance the weighted average lease expiry (WALE) of the portfolio.
The transaction should also support a “superior long-term growth profile of distributable earnings.”
The loan-to-value ratio would reduce meaningfully, creating capacity to fund the development pipeline “on attractive terms.”
The properties sold were 100 Scimitar Way, Coventry, let to GXO Logistics UK; Island Road, Reading, let to DHL International (UK); Unit 3 The Hub, Burgess Hill, let to Roche Diagnostics; Hoyland Common, Barnsley, let to Evr; and Super G, Glasshoughton, let to Puma United Kingdom.
Equites’ share price fell 1.21% to R17.13 on the JSE Wednesday afternoon, a price that had risen from R15.47 a year ago.
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