Equites developed the DSV logistics facility in Cape Town. Equites said the Middle East crisis may spur additional demand for additional logistics and distribution space as brand owners sought better efficiencies from their logistics and distribution operations, in the faceof rising costs and disruptions.
Image: Supplied
Equites Property Fund reported a sturdy 3.6% rise in portfolio value in 2025 as it pivots to its SA assets in a market where the Middle East conflict is likely to boost already strong demand for state-of-the-art distribution and logistics centres.
The portfolio value was R28.7 billion as of February 28, the results released Thursday showed. This comes on the heels of a year characterised by a strong financial performance. Group distributions grew by 5.3%, spurred by 5.4% rental growth in South Africa and 4% in the UK, alongside contributions from new developments and lower funding costs.
"We are pleased with the strong momentum in executing our strategic priorities, including rationalising our UK portfolio and redeploying capital into South African opportunities with superior long-term growth potential," said Equites CEO Andrea Taverna-Turisan.
This strategic shift has positioned South Africa as the primary growth driver within Equites' portfolio.
Taverna-Turisan said in an interview economic and supply chain uncertainties brought on by the Middle East conflict will likely boost demand for premium logistics and distribution centres, as well-known brands and businesses optimise their distribution efficiencies in the face of rising costs and other disruptions such as shipping.
"We believe the conflict will fast-track development decisions in this regard," he said.
The uplift in valuation is credited to land acquisitions totalling R146m, a development spend of R521m, and fair value improvements of R931m from the income-producing segment, which were partially offset by property disposals valued at R636m.
The South African portfolio performed resiliently with 6.7% like-for-like valuation growth.
Impressively, nearly 100% of Equites' revenue is derived from A-grade tenants, with only a single vacancy of 5,000 square metres recorded in Meadowview. The weighted average lease expiry (WALE) is currently at 13.7 years, accompanied by a weighted average lease escalation of 6,1%, elements that greatly contribute to the income certainty prized by both equity and debt investors.
Equites has significantly shifted from asset recycling to a focus on capital deployment and growth, where South Africa is set to be the main driver of earnings and value, said Taverna-Turisan.
This week, the fund announced the disposal of its Aviva portfolio, valued at £200.5m, along with various other UK assets. This included the DPD asset sold in Burgess Hill for £17.65m at a 5% yield, thereby allowing the group to reinvest into high-quality, ESG-compliant logistics projects in South Africa.
There remains one more UK under rent review, which should be sold by the end of the new financial year, he said.
With modern logistics facilities in high demand, fueled by shifts in supply chains and e-commerce growth, Equites remains well-positioned for continued growth.
Recent initiatives include disposing of three properties in the Western Cape and acquiring a new asset in the Eastern Cape, while a logistics property in Waterfall, Gauteng, was sold for R117m post-year- end.
Equites also has ambitious development plans in place, including a 90,000 square metre logistics facility for Tiger Brands, in partnership with Tridevco. Additionally, two speculative developments at Jet Park are slated for completion by August 2026 amid strong interest.
Taverna-Turisan said they would be development focused in South Africa rather than seek acquisitions, and over 36 months the development pipeline was potentially worth about R6bn.
To solidify its financial footing, the group had strengthened its capital structure through asset disposals and an equity raise of R700m, improving its loan-to-value ratio to 35.1%, and with the disposals in the UK, this loan-to-value would reduce even further to around 25%, he said.
Looking ahead, Equites forecasted a distribution per share of between 147,7 cents and 150,5 cents for 2027, signaling a growth of 5% to 7%. This optimistic outlook was underpinned by a solid South African portfolio, marked by long WALE and contractual lease escalations, as well as a commitment to delivering sustained shareholder value.
BUSINESS REPORT