JSE-listed Equites Property Fund which owns and manages top-end logistics properties in SA and the UK, has sold two distribution centres in Peterborough in the UK as it recycles non-core assets to firm up its capital.
The lease periods on the warehouses were 5.4 years and 6.3 years respectively. The assets were sold to an investment fund managed by Clarion partners Europe for £51,81m (R1.2bn) in cash at a yield of 4.49%.
The transaction would release net cash proceeds of about R1bn to Equites. The transaction would also lower Equites’ loan-to-value (LTV) ratio across its portfolio, increase the weighted average lease expiry (WALE) of the portfolio, and enhance the growth profile of distributable earnings per share over the long term.
Equites, through its Isle of Man based wholly owned subsidiary, Equites International, concluded a share purchase agreement in terms of which Equites International would sell the entire share capital held in each of Equites UK SPV 7 and Equites UK SPV 8 to Clarion.
Equites SPV 7 owns the property known as Unit 3, Artemis Way, Alwalton Hill, Peterborough. The property comprises of warehouse and office components sized at 302,723 square feet and is let to DSV Solutions Limited until 22 August 2028.
Equites SPV 8 owns the property known as Unit 2, Artemis Way, Alwalton Hill, Peterborough. The property comprises of warehouse and office components totalling 135,721 square feet and is let to Coloplast until 23 June 2029.
The board decided to dispose of the two properties for a variation of reasons. The remaining lease lengths in respect of the DSV property and the Coloplast property at 5.4 years and 6.3 years respectively, were significantly below the WALE of the UK portfolio of 15.6 years as of August 31 2022. The proceeds will be reinvested in the development pipeline in SA, which consists of pre-let development agreements with blue-chip tenants on long-term leases, increasing the WALE of the portfolio and enhancing the growth profile of distributable earnings per share over the long term.
Clarion focuses on investing in logistics and industrial properties located across Germany, the Netherlands, France, Spain, Italy and other European countries. Clarion Partners LLC, a SEC registered investment advisor, owns a majority stake in Clarion.
Clarion Partners and Clarion collectively manage a property portfolio in the U.S. and Europe consisting of more than 2,123 million square feet or circa 197 million square metres, with more than $84bn of assets under management.
Equites, which listed in 2014 with a R1bn property portfolio, is led by CEO, Andrea Taverna-Turisan. Today, it owns logistics assets in the UK and SA at a combined value of more than R27bn. The group competes with the likes of Fortress, Improvon and JT Ross. The group is looking to dispose of R4bn of secondary assets by June 2024. The Clarion deal is a strong start in this endeavour.