Wrap Text
Trading statement and update on transactions
EQUITES PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
JSE share code: EQU ISIN: ZAE000188843
(Approved as a REIT by the JSE)
(“Equites” or “the Company”)
TRADING STATEMENT AND UPDATE ON TRANSACTIONS
HIGHLIGHTS OF THIS ANNOUNCEMENT
- Distribution per share for the 6 months to 31 August 2015 is expected to be between 54.7% and 56.2% higher
than corresponding financial period and between 9.5% and 12.4% higher on an adjusted 6 month basis.
- Full year distribution growth of 10-12% expected.
- Net asset value per share expected to have increased to between R12.10 and R12.20 by 31 August 2015.
- Fair value of investment property expected to exceed R4 billion by February 2016.
- Several yield accretive transactions concluded.
- 40 hectares of industrial land available for A-grade developments.
TRADING STATEMENT
In terms of paragraph 3.4(b)(vi) of the JSE Listings Requirements, Equites has adopted distribution per share as its
financial results measurement for trading statement purposes, for reporting periods ending 31 August 2015 and thereafter.
The JSE Listings Requirements require the Company to publish a trading statement as soon as it is satisfied that a
reasonable degree of certainty exists that the distribution per listed share will differ by at least 15% from the distribution
for the previous corresponding financial period.
Accordingly, shareholders are advised that Equites anticipates that the distribution per share for the six months ended
31 August 2015 will be between 45.0 cents per share and 46.5 cents per share, being between 54.7% and 56.2% higher
than the 20.4 cents per share reported in the interim results for the six months ended 31 August 2014. This is primarily as
a result of the distribution for the comparative financial period being for the three months from 1 June 2014 to
31 August 2014, while the distribution for the current period is in respect of a six month period.
The anticipated dividend will also exceed the forecasted distribution of 43.4 cents per share set out in the pre-listing
statement by at least 4% and will be between 9.5% and 12.4% higher than the comparative financial period on an adjusted
6 month basis, as a result of:
- cost management and good tenant renewals;
- the acquisition of Intaprop Proprietary Limited (“Intaprop”), which improved the property fundamentals and
was yield accretive; and
- other smaller yield accretive acquisitions.
The Company had previously guided full year distribution growth of 7-8% (on an adjusted full year basis). The Company
now expects full year distribution growth for the year ended 28 February 2016 to be 10-12% higher than for the previous
corresponding financial period (on an adjusted full year basis).
The net asset value per share as at 31 August 2015 is expected to increase to between R12.10 per share and R12.20 per
share.
This guidance is based on the assumptions that a stable macro-economic environment will prevail, no major corporate
failures will occur and tenants will be able to absorb the recovery of rising utility costs and municipal rates. This forecast
has not been audited or reviewed by Equites’ auditors.
UPDATED PROPERTY FUNDAMENTALS
The acquisition of Intaprop increased the fair value of investment properties to approximately R3.4 billion which is
expected to exceed R4 billion by 28 February 2016. This was the Company’s original 5 year target on listing and will be
achieved within 21 months of listing.
The weighted average lease expiry profile of the entire property portfolio is now 5.7 years and 96.6% of tenants (based on
revenue) are A-grade. 87.7% of revenue is from the industrial sector, primarily from distribution warehouses, which is the
Company’s core focus. Total vacancies are less than 0.5% and average escalations are 8%. Rental income is now also
almost evenly weighted between Gauteng and the Western Cape.
These sound property fundamentals together with the further transactions set out below are expected to support strong
distribution growth in the medium to long-term.
SUMMARY OF MATERIAL TRANSACTIONS SINCE LAST PUBLISHED RESULTS
Acquisition of Intaprop
As announced on SENS on 29 May 2015, Equites entered into an agreement in terms of which it acquired all of the shares
and claims in Intaprop in consideration for ordinary shares of no par value in the capital of Equites. The Intaprop property
portfolio is located in Gauteng and Cape Town and consists primarily of industrial properties and undeveloped industrial
land. The effective date of the Intaprop transaction was 1 July 2015.
Following the Intaprop transaction, the value of Equites’ property portfolio increased from approximately R1.5 billion to
R3.4 billion. In terms of the aforementioned transaction, Equites is paying the vendors (by way of shares in Equites) an
amount equal to the net asset value of the target company and assuming debt of approximately R1.4 billion.
Acquisition of Lords View Property and TFG minority stake
As announced on SENS on 3 February 2015, Equites concluded a joint venture agreement with Lord Trust Developers
Proprietary Limited (“Lord Trust”) for the purposes of developing a 22,227 square metre distribution warehouse for The
Foschini Group (“TFG”) in the Lords View Industrial Park in Gauteng. The capital value of the project is approximately
R150 million with Equites originally owning 75% of the joint venture and the Lord Trust owning the remaining 25%.
Following further negotiations, Equites and Lord Trust reached an agreement, as announced on SENS on 27 August
2015, to cancel the joint venture between Equites and Lord Trust, resulting in Equites owning the entire TFG distribution
warehouse currently being developed at Lords View Industrial Park in Gauteng.
In addition, Equites acquired approximately 17 hectares of vacant industrial land at the Lords View Industrial Park from
Lord Trust. The purchase consideration is R180 million and transfer is expected to occur during November 2015.
Acquisition of Tunney Ridge Business Park
As announced on SENS on 19 August 2015, Equites concluded an agreement for the acquisition of the property letting
enterprise conducted in respect of Erf 497 Tunney Extension 15 Township Registration Division I.R., Gauteng and
known as the Tunney Ridge Business Park (“Tunney Ridge property”), from Tunney Ridge Proprietary Limited for a
purchase consideration of R137 million (“the Tunney Ridge transaction”). This acquisition is consistent with Equites’
growth and investment strategy of building a quality industrial portfolio that promotes capital growth and increasing
income returns in the medium to long-term for shareholders. The effective date of the transaction is
1 November 2015.
The total GLA of the Tunney Ridge property amounts to 13.808 square metres and consists of four buildings. Three of
the four industrial buildings on the property have long dated leases in places with quality tenants. Equites has obtained a
three year rental guarantee in respect of the fourth building. The Tunney Ridge property will therefore add to the quality,
defensiveness and income predictability of Equites.
Acquisition of Atlantic Hills, JF Hillebrand and signing of Puma development lease
As announced on SENS on 14 September 2015, Equites concluded the acquisition of all the shares and claims in Intaprop
Hills Proprietary Limited (“Intaprop Hills”) from Intaprop Investments Proprietary Limited (“the Intaprop Hills
transaction”). Intaprop Hills is the owner of Atlantic Hills Industrial Park, which is a 7 hectare industrial park situated
adjacent to the Potsdam off-ramp on the N7 highway in Cape Town (“Atlantic Hills property”). This Intaprop Hills
transaction also includes the acquisition of a completed 3 499 square metre new distribution centre which is currently
being developed by Intaprop Hills for JF Hillebrand South Africa Proprietary Limited (“JF Hillebrand”), at a capital
value of R35 million. JF Hillebrand, which has entered into an 8 year lease commencing on 1 December 2015, is the
largest logistics solution provider to the wine and spirit industry in the world. The purchase consideration is R52 million
which will be settled during October 2015.
Equites has concluded a development lease with Puma Sports Distributors Proprietary Limited, the global apparel and
sportswear brand, for the construction of a new 16.262 square metre distribution centre and head office on the Atlantic
Hills property (“the Puma development”). The capital value of the project is approximately R155 million and the lease
agreement has a duration of 9 years and 11months. It is anticipated that the Puma development will be completed in
August 2016.
Development of new Epping facility
The board of Equites has approved the construction of a distribution warehouse development at 160 Gunners Circle,
Epping, Cape Town. The distribution warehouse will be 8 500 square metres in size and the project will have a capital
value of R72 million. Construction will commence in October 2015 with completion expected in August 2016. There is
high demand for A-grade industrial space in Epping and the market is currently experiencing very low vacancy levels.
Further development pipeline of R1.8 billion
Following the above transactions, the Company has approximately 40 hectares of prime, serviced industrially zoned land
available for development. Equites is pursuing a number of opportunities for distribution warehouses on these parcels of
land, which are expected to ultimately amount to a capital value of approximately R1.8 billion.
After the acquisition of Intaprop and the execution of the above transactions, Equites will exceed its targeted maximum
loan-to-value ratio of 40%. As a result, the board will seek to raise additional capital, further details of which will be
announced shortly.
16 September 2015
Corporate advisor and sponsor
Java Capital
Date: 16/09/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
