Equites Property Fund has reported strong performances from its SA and UK portfolios for its 2025 financial year, bolstered by a significantly reduced loan-to-value (LTV) ratio from 39.6% to 36%, and securing the lowest credit spreads in the sector during the period.

“With the focus on like-for-like (LFL) rental growth both in SA and the UK, limited vacancies during the period, and the ability to generate revenue from renewable energy, the Group has delivered a distribution per share of 133.92, which is on the upper end of the previously provided guidance,” comments CEO, Andrea Taverna-Turisan.

The REIT’s R27.7 billion portfolio of logistics assets is currently 99.9% occupied, with a weighted average lease expiry (WALE) of 14 years with strong escalation clauses. Its R21.1 billion SA portfolio delivered like-for-like rental growth of 5.9% during the period, valuation growth of 6%, and a WALE of 14.1 years – with no vacancies at yearend. Equites disposed of several smaller, specialised assets during the year.

Its UK portfolio delivered rental growth, with three assets undergoing rent reviews, resulting in uplifts of between 19% and 69%. The valuations remained reasonably flat with a 1% uplift in GBP terms. The UK portfolio has a WALE of 13.1 years with only a single ancillary unit, representing 1.5% of the UK portfolio vacant at yearend.

Equites acquired and developed 15 assets in the UK with a cumulative development value exceeding £450 million with the assets reaching a peak value of £550 million. Seven of these assets, along with the Newlands development platform, have been sold and the Board has decided to explore the sale of the remaining UK portfolio. The REIT says this decision was driven by the maturity of the existing assets and the opportunity to reinvest the proceeds in SA.

In SA, Equites successfully completed a 16 721m² facility in Jet Park in March 2024, let to SPAR Encore. The Group says it expects to develop the remainder of the Jet Park land within the next 18 months.

Equites also completed R195 million of improvements to the Shoprite Centurion facility as part of the existing lease expiring in 2044. Two other Shoprite facilities were completed, both with 20-year leases – the R1.2 billion development of an 80 531m² facility at Wells Estate in the Eastern Cape and a groundbreaking R1.3 billion campus in Riverfields in Gauteng. Three speculative developments with a total GLA of 20 116m² were completed in FY2025.

Through refinancing debt in SA , Equites’ all-in cost of debt in SA decreased from 9.1% to 8.6%, with an average debt maturity of 3.8 years. The UK cost of debt has remained constant at 3.9%, with almost 90% of UK debt maturing in FY2033. More than 83% of the debt is hedged against interest rate volatility.

The Group’s reduced LTV of 36% was driven by R1.4 billion of assets sold in SA at a premium to book value of 1% and R1 billion of assets sold in the UK at a discount of 0.5%.

Its Board expects its distribution per share (DPS) to increase at a rate above inflation – within a target range of 140.62 – 143.29 cents per share, reflecting growth of between 5% and 7%.

“Equites has made the strategic decision to invest in assets which offer both income certainty (through tenure) and annual escalation clauses, thereby organically underpinning distribution growth. Like-for-like rental growth for FY2025 amounted to 5.9%, a level at which the Group expects to see like-for-like growth stabilising. By effectively managing administrative costs and the cost of debt, the Group expects to deliver distribution growth consistently higher than South African consumer inflation over the long term,” he concludes.