Equites Property Fund, the only industrial real estate specialist listed on the JSE, has agreed to develop a distribution centre for global e-commerce giant Amazon in the UK, a major boost to its strategy of diversifying away from SA and taking on blue-chip tenants.
Equites expects the £41.3m (R846m) development in Peterborough, the UK, to be completed in October 2021, with the deal the second signed development deal to arise from its strategic partnership with UK property developer Newlands.
Equites has a 60% stake in the joint venture, which it formed with Newlands after concluding this was the best way to access land holdings in the UK and to build scale in that country’s logistics market.
Equites said on Tuesday that Amazon signed a 15-year triple net, fully repairing and insuring lease that will commence on completion. Triple net refers to an agreement where the tenant pays all the expenses of the property, such as maintenance, insurance and real estate tax.
Equites forecasts the deal will generate R52.5m in rental revenue in its year to end-February 2023, having generated R993m in property revenue for its year to end-February 2020.
Amazon is the largest internet company by revenue in the world, Equites said, adding that Amazon recently said it has invested more than £18bn in the UK economy since 2010, and intends to continue investing in the region.
Equites had a portfolio valued at R16.2bn at the end of August, with R7.3bn of this portfolio located in the UK.
In November, Equites announced it had reached a R1.5bn development deal for distribution centre in the UK for courier services group Hermes Parcelnet.
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