Our opinion on the current state of EQUITES(EQU)Equites (EQU) is the only real estate investment trust (REIT) on the JSE that specialises in industrial logistics and distribution properties in South Africa and the UK. It has approximately R12 billion worth of assets in South Africa and R7.4 billion worth in the UK. Its most recent acquisition, a 100,000 square meter logistics property in Germiston, was expensive but comes with an A-grade tenant, Simba, and a good yield, making the property highly profitable in the future. The property was bought from Investec Asset Management for R462 million.
Of all property REITs, those that include logistics properties like warehousing are the most sought-after due to the steady increase in online shopping by consumers. CEO Andrea Taverna-Turisan says, "...a wall of cash is leaving retail property and going to logistics." Equites has achieved a return of just under 25% per annum since its listing.
In its results for the six months to 31st August 2024, the company reported revenue up 62% and headline earnings per share (HEPS) up 17.7%. The company's net asset value (NAV) fell 2.4% to 1632c per share. The company said, "The Group continued with its disposal programme, completing the disposal of a further R0.6 billion of assets in 1H25. This, combined with a successful dividend reinvestment programme in May 2024, has funded R0.9 billion of development expenditure, whilst maintaining a stable LTV ratio of 41.0%."
Since June 2023, the share has been rising steadily in a volatile upward trend. We believe that Equites represents good value at the current price, despite having a relatively high LTV. We regard this as one of the better property shares available on the JSE.
