Our opinion on the current state of EQU

2023年10月11日

Equites (EQU) is the only real estate investment trust (REIT) on the JSE which specialises in industrial logistics and distribution properties in South Africa and the UK. It has about R12bn worth of assets in South Africa and R7,4bn worth in the UK. Its most recent acquisition of a 100 000 square meter logistics property in Germiston was expensive, but it has an A-grade tenant in the form of Simba and a good yield which will make the property highly profitable in years to come. The property was bought from Investec Asset Management for R462m. Of all property REITs, those which include logistics properties like warehousing are the most sought-after because of 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 it listed. In its results for the six months to 31st August 2023 the company reported gross property revenue up 8,8% and headline earnings per share (HEPS) down 64%. The company's loan-to-value (LTV) was 42,3%, but reduced to 38,1% after post-period transactions. The company said, "Operationally, both the SA and UK property portfolios are performing in line with expectations. This is driven by strong like-for-like net property income growth, record-low vacancy rates, and an uptick in property valuations". Technically, Equites saw its share price move sideways for two years before falling in response to COVID-19. Since June 2023 the share has been rising steadily in a new upward trend. We believe that Equites represents good value at the current price. We regard this as one of the better property shares available on the JSE.