Andrea Taverna-Turisan listed Equites Property Fund five years ago with a portfolio of 17 Western Cape-based industrial and office properties valued at R1.2bn.
Since then his team has grown the company’s portfolio to be worth R13.5bn, with a third of it located in the UK and two thirds in SA.
Taverna-Turisan, who founded food import business Rialto Foods in 1998, learnt how to design, build and manage logistics warehouses in-house. This strategy has helped him build Equites’ portfolio at a rapid rate. About three years ago, the company expanded into the UK and developed or acquired high-end logistics assets there. The company was drawn in by the fact that 20% of retail sales are online in the UK.
Equites outperformed the JSE property index in 2019, adding 9.97% in the course of the year, compared with a 5.21% fall for the index. It has regularly achieved double or close to double digit dividend growth since listing.
Why should retail and institutional investors give their money to Equites?
Equites has established itself as a leading owner and developer of high-quality logistics assets in SA and the UK. It is the only specialist logistics real estate investment trust listed on the JSE. This gives shareholders pure exposure to an asset class that is expected to outperform over time.
Your portfolio has grown quickly. Was it always your intention to buy and develop assets so aggressively?
From the outset our goal has been to become the only sizeable industrial-focused company listed on the JSE. We are starting to achieve that now with a market capitalisation of about R11.6bn and R13.5bn worth of assets. We are now able to compete with other diversified property companies for multinational and blue chip tenants.
How much of your asset base is exposed to local SA tenants and how much is exposed to international tenants? Are you concerned that there may be tenant failures, especially in SA?
It’s hard to give an actual split but I’d say that about 93% of our tenants could be considered to be blue-chip tenants. Luckily we have avoided the two major tenant failures in SA — that of Edgars and Steinhoff, two companies which we had no exposure to.
We have good insight into what our tenants are doing as we internally manage our properties. Our staff look at our assets and can see if tenants are struggling. They can tell if a warehouse is lying empty.
You expanded into the UK about three years ago and have acquired sizeable assets there. How much of your overall portfolio is exposed to the UK now and do you have a target for that exposure?
Well, about a third of our assets are in the UK while the balance is in SA. We don’t have a set target but we are opportunistic. We will buy or develop logistics assets in areas that we believe will benefit us.
Right now, we are excited to announce that we have joined forces with UK joint-venture partner Newlands Property Developments LLP to unlock strategic land tracts for development in that region.
The Newlands team comes with extensive expertise in promoting industrial land parcels and the procurement and execution of large logistics developments.
We have already invested R455m into strategic land holdings, consisting of two acquisitions of land in Basingstoke and Peterborough and have also entered into options over three other land parcels as part of the joint venture.
Equites boasts an uninterrupted double-digit annual dividend growth track record since listing on the JSE in mid-2014. Can you maintain this momentum?
With the landholdings we have here in SA and in the UK, I’d say we are in for quite a few years of growth. We grew our dividend 9.3% in the six months to August and we could grow our dividend 10% in the full year to February 2020. Historically, we do better in the second half of the year than we do in the first half as our escalations kick in. We also don’t have leases expiring in the second half of the financial year.
Are you looking to sell any assets?
We have a few assets we’d like to sell to the market as we don’t want to own any properties less than 5,000m2 in size. I think there are some private groups who would be interested in buying our smaller assets.
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