Equites Property Fund has formed a R1.45bn joint venture with the Eskom Pension and Provident Fund (EPPF) to provide impetus to its logistics-focused portfolio.
Equites has committed R732m for a 51% stake in the venture, which also announced it first deal on Wednesday — the R2.05bn acquisition of a logistics campus in Johannesburg.
The JV will provide EPPF members with exposure to logistics-focused assets, which have received a nudge from Covid-19, while offering Equites a platform for raising funds via the potential sale of minority stakes of assets in SA.
Equites CEO Andrea Taverna-Turisan told Business Day the group had been on a drive to diversify its funding, especially as pressure on stocks during Covid-19 made tapping shareholders unattractive.
The new vehicle was a “marriage made in heaven” as it offers Equites the potential for more diverse funding streams while giving the EPPF exposure to the direct property market it has been seeking, Taverna-Turisan said. “This deal seems to us to be the perfect deal,” he said.
Equites listed on the JSE in 2014 and its clear focus on high-quality logistics assets has seen the value of its portfolio grow from R1bn to R21.2bn at the end of August, and by almost 10% from the end of February. About two-thirds of its assets are located in SA, and blue-chip tenants include Shoprite, Puma and Simba.
The EPPF oversees the retirement savings of more than 80,000 members, and has more than R140bn in assets under management. It has been looking to diversify its investments, including private equity, in addition to investing in areas where there are social and economic benefits, including infrastructure.
EPPF chief investment officer Ndabezinhle Mkhize was appointed as a non-executive director of Equites from October 1.
Equites said on Wednesday the joint venture would buy a logistics campus in Gauteng for R2.05bn from DSV Real Estate Johannesburg, and then conclude a long-term lease with DSV Solutions, which is the world’s fifth-largest third-party logistics provider.
The initial 10-year lease is a double-net agreement, meaning the tenant pays both property taxes and covers insurance.
Logistics as an asset class has fared well due to Covid-19, which has boosted e-commerce and forced companies to look closely at their distribution costs. Taverna-Turisan said activity in SA, particularly at the top-end of the market, remained buoyant, and while there were numerous potential developments in the offing, the market was also highly competitive.
“We do believe we will get our fair share,” he said.
Equites shares were 0.23% higher at R22.05 in afternoon trade on Wednesday, having risen more than a quarter so far in 2021, and 9% since the beginning of 2020.
Update: October 13 2021
This article has been updated with additional information throughout.
With Garth Theunissen
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.