Establishment of joint venture and acquisition of DSV Campus
EQUITES PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
JSE share code: EQU
Alpha code: EQUI
(Approved as a REIT by the JSE)
(“Equites” or the “group”)
ESTABLISHMENT OF JOINT VENTURE AND ACQUISITION OF DSV CAMPUS
Shareholders are advised that Equites and the Eskom Pension and Provident Fund (“EPPF”), have agreed terms pursuant to
which, inter alia –
• Equites and EPPF will establish a joint venture company (“JVCo” or “Purchaser”) in which Equites will subscribe for
51% of the share capital and EPPF will subscribe for the remaining 49%;
• Equites’ total equity contribution to the JVCo will be R732 million;
• the JVCo will acquire Erf 1881 Witfontein Extension 89 Township, Registration Division IR, Province of Gauteng,
measuring c. 38.3 hectares in extent (“Property” or "DSV Campus") from DSV Real Estate Johannesburg Proprietary
Limited (“Seller”) on the basis that the Property will be leased back to DSV Solutions Proprietary Limited (“Tenant”),
a subsidiary of DSV A/S, for a purchase price of R2 050 000 000, reflecting an initial yield of 7.68% (“Sale
• the JVCo and the Tenant will conclude a long-term “double net” lease agreement in respect of the DSV Campus (“Lease
The Transaction meets Equites’ strategic objectives of:
• investing in high-quality assets which meet modern-logistics criteria;
• focusing on an asset class which has proven to outperform over time;
• investing in assets with world-class sustainability elements;
• growing its relationship with key tenants in the portfolio; and
• creating further scale in its high-quality logistics portfolio through the acquisition of an asset with a stable and predictable
rental growth profile which enhances capital and income growth in the medium to long-term.
The intention is to establish a strategic venture between Equites and EPPF with the aim of building a world-class logistics
property portfolio in South Africa. EPPF is one of the largest asset managers in the country, with R145 billion assets under
management and this joint venture creates a mutually beneficial partnership built for the future. Through this JVCo, Equites
has the ability to potentially dispose of a stake in its South African properties to the JVCo in the future, which ensures that
EPPF will obtain exposure to the highly coveted logistics sector whilst providing Equites with an alternative source of equity
for its attractive development pipeline both in the UK and in SA.
For Equites, the Transaction evidences the following sound fundamentals in line with its investment criteria:
• Enhanced income certainty – the lease is concluded on a ten-year basis with two renewal options of three years each;
• Superior quality build – the logistics campus was built to DSV’s exacting requirements and to institutional standards;
• Location – the Property is strategically located on the R21 highway in Riverfields, Gauteng, the location benefits from
convenient and easy access to Johannesburg, Pretoria, and the surrounding municipalities, the R21 highway, the O.R.
Tambo International Airport, and intermodal transportation services.
• High quality tenant – the Tenant is a subsidiary of DSV Solutions Holding A/S which, in turn, is wholly owned by DSV
Panalpina A/S (aka DSV A/S), headquartered in Denmark. DSV is listed on the Copenhagen Stock Exchange, has 1 300
offices and logistics facilities in more than 80 countries and employs 57 000 people. DSV Panalpina is rated A- (Stable)
by Standard & Poor’s and A3 (Stable) by Moodys, as of February 2021. Currently DSV is the fifth largest third-party
logistics (3PL) provider globally, and with the acquisition of Agility GIL (announced 27 April 2021, and expected to be
completed in 3Q21) will be the third largest 3PL with estimated combined revenue of USD 21.7 billion (Source DSV
Roadshow presentation Q1 2021).
3. PROPERTY DETAILS
The Property consists of approximately 87,000 m² of warehouse space, 40,000 m² of cross-dock space, and a three-storey
P-grade office facility measuring over 10,500 m². The warehouse has a clear ceiling height of 14.3 meters and the cross-dock
building has 9-meter eaves.
The Property includes sufficient photovoltaic capacity to generate 0.99 MW of electricity, five boreholes, a water filtration
plant, double glazing for heat and acoustic improvement, and LED lighting as part of improving its environmental impact.
All the buildings on the site have been constructed to the highest standards and DSV has put in place measures to ensure the
long-term sustainability of the facility.
Property GLA^ Property type average Purchase
Name Geographical Location (m2) rental per consideration
Erf 1881 Witfontein,
DSV Campus 142 129 Logistics R92.35 R2 050 000 000
^ gross lettable area
The directors of Equites are satisfied that the purchase consideration is in line with its fair market value. The directors of
Equites are not independent and are not registered as professional valuers or as professional associate valuers in terms of the
Property Valuers Profession Act No. 47 of 2000.
4. TERMS OF THE TRANSACTION
The salient features of the Sale Agreement are:
• The Seller will sell the Property to the Purchaser as a going concern for a cash purchase price of R2 050 000 000
including VAT at a zero rate and the purchase price is to be secured by a bank guarantee.
• The costs of the transfer, including conveyancing costs, will be borne by the Purchaser.
• The Sale Agreement is subject to certain conditions precedent, including Equites' satisfaction with the results of its due
diligence investigation, approval from the competition authorities and the conclusion of the Lease Agreement.
• The Sale Agreement includes market-related warranties and limitations of liability.
• The development guarantees and the development agreements in respect of all elements relating to the development of
the Property will be transferred by the Seller to the Purchaser.
The salient features of the Lease Agreement are:
• The lease will be a double net lease (fully repairing and recovering lease save for the JVCo’s (the “Landlord”) obligations
in respect of a limited list of structural items).
• The lease will endure for an initial period of 10 years.
• The term of the Lease Agreement and rent commencement shall commence upon closing of the Transaction, being from
the date registration of the transfer of the Property into the name of the Purchaser (“Transfer Date”).
• The initial annual rental payable by the Tenant shall be R157 515 084 (including VAT) which is based on a rental area
of 142 129 m².
The effective date of the Transaction will be the Transfer Date, which will occur as soon as possible after the last of the
conditions contained in the Sale Agreement has been fulfilled, which is expected to be during November 2021.
5. CONDITIONS PRECEDENT
The Transaction is subject to certain conditions precedent, including –
• completion of an ordinary course due diligence investigation Equites to the satisfaction of Equites;
• the Purchaser and the Tenant entering into the lease and the Lease Agreement has become unconditional in accordance
with its terms and conditions;
• the Purchaser has demonstrated to the satisfaction of the Seller that on the Transfer Date it will for purposes of the
Broad-Based Black Economic Empowerment Amendment Act of 2013 have an agreed level of black ownership and
• approval by the competition authorities in accordance with the Competition Act No. 89 of 1998.
The Sale Agreement and the Lease Agreement contain the undertakings, warranties and indemnities which are normal for a
transaction of this nature.
6. FINANCIAL INFORMATION
Distributable income forecast
Set out below is the JVCo forecast for the Transaction (“the forecast”) for the 3 months ending 28 February 2022 and year
ending 28 February 2023 (“the forecast period”).
The forecast has been prepared on the assumption that the Transaction will be fully implemented on 1 December 2021.
The forecast, including the assumptions on which it is based and the financial information from which it has been prepared,
is the responsibility of the directors of Equites and has been prepared in accordance with Equites’ accounting policies, which
is in compliance with International Financial Reporting Standards. The forecast has not been reviewed or reported on by
independent reporting accountants.
Forecast for the Forecast for the
R’000 period ending period ending 28
28 February 2022 February 2023
Contractual rental income 39 378 771 160 271 598
Property expenses (636 250) (2 545 000)
Finance costs (10 762 500) (43 050 000)
Net distributable earnings 27 980 021 114 676 598
The forecast incorporates the following material assumptions in respect of revenue and expenses:
• The contractual Lease Agreement is assumed to be valid and enforceable.
• The forecast assumes an initial loan-to-value ratio of 30%.
• JVCo will be a ‘controlled company’ for the purposes of section 25BB(1) of the Income Tax Act.
• There will be no tax leakage.
• There will be no unforeseen economic factors that will affect the tenant’s ability to meet its commitments in terms
of the leases.
Funding and impact on Equites’ LTV ratio
Equites’ equity contribution to the JVCo will be funded from existing cash resources and undrawn debt facilities. The
Transaction will increase Equites’ LTV ratio by 3.1% from 28.6% (31 August 2021) to 31.7%.
The Transaction is classified as a category 2 transaction in terms of the JSE Listings Requirements and accordingly does not
require approval by Equites’ shareholders.
13 October 2021
Corporate advisor and sponsor to Equites
Attorneys and legal advisor to Equites
Cliffe Dekker Hofmeyr Inc.
Competition Law advisors to Equites
Vani Chetti Competition Law
Nedbank Corporate and Investment Banking
(a division of Nedbank Limited)
Date: 13-10-2021 09:10:00
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