Tag Archives: Equites Property Fund

South Africa’s best performing REITS right now

South Africa’s REIT sector maintained its upward momentum in May 2025, delivering a 4.1% return for the month.

Once again, it outperformed both the broader equity market (3.1%) and bonds (2.7%), reinforcing its recovery trajectory.

This latest gain follows a strong 6.9% return in April, bringing the sector’s year-to-date performance to 6.7%—a notable rebound after a sluggish start in January.

Although REITs still lag behind the broader equity market’s impressive 14% year-to-date growth, they have now outpaced bonds in 2025.

This shift signals renewed investor confidence, coinciding with South Africa’s 10-year government bond yield recently dipping below 10% for the first time in over three years.

Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments – and compiler of the SA REIT Association’s monthly Chart Book – attributed the sector’s improving sentiment to several key drivers.

“The positive outlook is largely driven by expectations of lower interest rates in South Africa, a small reprieve in global tariff tensions, and growing evidence that property fundamentals are strengthening. These trends set the stage for higher distributable earnings growth across the sector in 2025 and 2026.”

Several REITs published financial results in May, providing further evidence of the sector’s ongoing recovery.

Redefine Properties, for instance, reported interim results for the period ending February 2025, with revenue rising 3.5% and distributable income per share increasing 0.7%.

The company maintained its full-year guidance, projecting distributable income per share between 50 and 53 cents – representing growth of 0% to 6%.

Equites Property Fund posted full-year results in line with expectations, increasing distributions by 2.1% to 133.92 cents per share.

More notably, the company’s guidance for 2026 exceeded consensus, with anticipated distribution growth between 5% and 7%, driven by robust rental escalations and a premium logistics portfolio shaped by two years of strategic asset recycling.

Equites was the top-performing REIT in May, with its share price advancing 10%.

Spear REIT also delivered strong results, benefiting from its focused strategy in the Western Cape. Its share price rose 9% following the release of its full-year results for the period ending February 2025.

The company also announced the acquisition of Berg River Business Park in Paarl for R182.15 million through an all-share transaction.

Other REITs reporting in May included Burstone, Delta Property Fund, Dipula Properties, Emira Property Fund, and Octodec Investments. Across the board, a consistent theme emerged: improving property fundamentals across all sub-sectors, further boosting investor sentiment.

The total market capitalisation of South Africa’s REIT sector has now exceeded R250 billion—its highest level since January 2020.

“With further interest cuts a possibility, stabilising macroeconomic conditions, and improving company guidance, investor confidence remains strong, and the momentum is likely to carry through the remainder of 2025,” said Anderson.

Logistics property group Equites lifts full-year dividend

Equites Property Fund, South Africa’s only specialist logistics Real Estate Investment Trust (REIT), has reported resilient financial and operational results for the year ended February 2025, with distributable earnings up 8.9% and its full-year dividend per share rising 2.1% to 133.92 cents.

The group, which focuses on high-quality logistics properties let to A-grade tenants on long-term leases, remains bullish about its growth trajectory into 2026, with guidance for distribution per share (DPS) to increase at a rate above inflation.

Equites’ South African portfolio grew to R21.1 billion at the end of February 2025 – up from R19.9 billion in 2024. The portfolio now represents the cornerstone of the group’s asset base.

Equites listed on the JSE on 18 June 2014 with a portfolio value of R1 billion.

Over the past 24 months, Equites said it has executed an extensive asset recycling programme, disposing of smaller, non-core, and non-ESG-compliant properties.

The streamlined portfolio now reflects high income predictability, with like-for-like (LFL) rental growth of 5.9% and a LFL valuation uplift of 6.0%, it said.

The South African portfolio was 100% let at year-end, with a weighted average lease expiry (WALE) of 14.1 years.

Key South African assets include flagship distribution centres occupied by blue-chip tenants such as Shoprite, Takealot, and Pepkor. Notable locations include prime logistics hubs in Midrand, Cape Town’s Airport Industria, and the Lord’s View Industrial Park in Gauteng.

Equites’ UK portfolio also performed well, with rent reviews on three properties delivering uplifts of between 19% and 69%. Valuations were broadly stable, with a 1% increase in GBP terms. The WALE for the UK portfolio sits at 13.1 years, with only one ancillary unit (1.5% of GLA) vacant.

Equites reported a 71.4% increase in gross property revenue to R4.26 billion (FY24: R2.48 billion), with distributable earnings rising 8.9% to R1.12 billion. Headline earnings per share also rose by 6.9%, reaching 125.2 cents per share.

Additional financial highlights:

-Gross property revenue surged 71.4% to R4.26 billion
-Distributable earnings increased to R1.12 billion
-Net asset value (NAV) per share declined slightly by 3.8% to 1,649 cents
-Loan-to-value (LTV) ratio at a stable 36.0%
-R2.4 billion in asset disposals concluded during the year
-R2.9 billion in cash and undrawn facilities available
-Six power purchase agreements (PPAs) signed, expected to generate revenue in FY26

Looking ahead, the board expects the FY26 distribution to grow between 5% and 7%, which equates to approximately 140.62 to 143.29 cents per share. This growth is expected to be driven by new developments completed during FY25, the Group’s stable cost base, and continued strong tenant performance.

The guidance is based on several assumptions, including a stable GBP/ZAR exchange rate within the range of R22.00–R26.00, no major tenant defaults, and continued cost recoveries from tenants.

The final gross dividend of 67.42 cents per share, declared on 14 May 2025, follows the interim dividend of 66.50 cents per share, bringing the total FY25 distribution to 133.92 cents—aligning with the group’s guidance range of 130 – 135 cents.

Sluggish start for REITs in 2025

South Africa’s Real Estate Investment Trust (REIT) sector showed a recovery in February, rebounding by 1.2% after the price declines seen in January.

This return outpaced the broader equity market, which remained flat, and the bond market, which posted a modest 0.1% gain.

Despite this bounce-back, the sector has still posted a 2.5% decline year-to-date, underperforming both the equity and bond markets.

According to Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments as well as compiler of the SA REIT Association’s monthly Chart Book and Richard Henwood, portfolio manager at Merchant West Investments, the overall investment outlook for the sector remains positive for 2025.

They believe that investors can expect a modest improvement in property fundamentals along with the possibility of lower interest rates.

This outlook is supported by recent developments, such as a 25-basis point rate cut by the South African Reserve Bank, the formation of a Government of National Unity, a reduction in loadshedding and the introduction of the two-pot retirement system at the end of 2024.

With these factors in mind, the sector is projected to see average growth in distributable income of 3% to 5% – a positive turnaround after three years of stagnation.

However, Anderson and Henwood caution that the market may face increased volatility due to global geopolitical tensions, particularly in relation to US President Donald Trump’s ongoing threats of higher tariffs, which could fuel inflation and impact economic growth globally.

During the reporting period, volatility remained elevated across global financial markets, with heightened concerns over geopolitical risks.

The potential for increased tariffs, especially on countries like China, Mexico, and Canada, could create inflationary pressures that complicate central bank efforts to cut interest rates further in 2025.

In addition, weaker economic data from the US in late February raised concerns over the future growth prospects of the world’s largest economy.

In South Africa, the 2025 Budget Speech was delayed after cabinet rejected proposed fiscal measures, including a 2% VAT increase, further contributing to uncertainty in the market.

Amid these challenges, individual companies in the REIT sector have shown varying degrees of success.

For example, Burstone’s partnership with TPG Angelo Gordon saw the acquisition of logistics assets worth A$280 million in Australia, while Dipula Income Fund reported strong growth in retail tenant turnover and improvements in operating metrics.

Equites Property Fund also remains optimistic, forecasting stable dividends and a reduction in its loan-to-value ratio.

Overall, while the South African REIT sector continues to face challenges, particularly from global uncertainties, the sector’s fundamentals appear poised for gradual improvement.

Cape Town opens electricity grid to energy traders after successful pilot

The City of Cape Town is opening its electricity grid to private electricity sales and trading following the conclusion of a successful year-long electricity ‘wheeling’ pilot project.

Wheeling allows participants to buy electricity directly from Independent Power Producers or licenced energy traders using existing municipal grid infrastructure.

Over 562 800 kWhs of power has already been generated and wheeled across the City’s grid between private sector energy traders during the pilot phase.

On average, a home in South Africa uses around 4,500 kWh per year so 562,800 kWh would be enough to power approximately 125 homes for a year.

“In this next phase, the City will promote the scaling up of power trading across our electricity grid between qualifying private sellers, based on bilateral and multi-lateral trading agreements,” said mayor Geordin Hill-Lewis.

“This is the start of a changing role for municipalities in the energy space. If we consider what has been generated just in the pilot, when we scale it up, the numbers get absolutely huge so it is important that we get it right. Thank you to our City teams and private partners who have shown again that Cape Town is leading the efforts to change the energy regime,” the mayor said.

Cape Town’s wheeling pilot phase included three wheeling participants (traders), three generators and three off-takers:

  • Trader (trades the generated energy over the City’s grid)
  • Generator (generator of the wheeled energy)
  • Off-taker (receiver of the wheeled energy)

Trader: Enpower Trading
Generator: FairBridge Mall, Brackenfell
Off-taker: Shoprite Head Office, Brackenfell

Trader: Etana Energy
Generator: Constantia Shopping Mall
Off-taker: Growthpoint Properties, City Centre

Trader: Equites Property Fund
Generator: Equites Property Fund Limited, Parow Industria
Off-taker: APF Portside, City Centre

Equites Property Fund said that the transfer of electrons from its generation site in Parow Industria to the off-taker on the Foreshore enabled the company to advance its sustainability objectives.

“We are excited about the prospect of expanding our wheeling capacity beyond the pilot to serve multiple off-takers and look forward to the moderation of wheeling tariffs to encourage greater participation in this transformative initiative,” said Equites Property Fund head of Sustainability, Irshaad Wadvalla.

“By successfully delivering renewable power to Shoprite Checkers over the past year, we have shown that energy wheeling and trading is not just viable but essential to diversifying South Africa’s power supply. We commend the City of Cape Town in paving the way for energy security and economic growth and look forward to continued collaboration in expanding renewable energy access,” said Enpower Trading CEO, James Beatty.