Investec Property Fund (IPF) is exploring options, including third-party capital, to expand its logistics business in Europe, where e-commerce and scarcity of land has boosted rental rates.
Consumers increased use of e-commerce has boosted demand for warehouses and logistics facilities. The property valuation of IPF’s pan-European logistics platform, which comprises 48 logistics hubs and warehouses, was €1.08bn in the six months to end-September, with base net rental income up 8.3%. About 80% of the portfolio is located in the core markets of Germany, France and Netherlands.
“The management team is assessing a pipeline of acquisition opportunities and will selectively pursue those that align with existing strategy and offer value unlock,” IPF said on Wednesday in an earnings statement.
“Achieving scale within this platform will enable the fund to benefit from synergies, cost efficiencies, diversification of risk and will provide critical mass and presence when engaging in deal negotiations in Europe.”
Several other SA property companies are also increasing their presence in the logistics market.
In October, Equites Property Fund said ferocious demand for warehousing space in the UK had resulted in supply declining at the fastest pace on record, fuelling an increase in market rental growth. Equites aims to expand in the top end of the logistics market there, in partnership with UK property investor Newland.
Investec Property’s SA property portfolio recovered during the review period, with net property income rising 12.8%, benefiting from lower rental discounts granted to tenants.
The SA vacancy rate dropped to 9.4% from 11.4% in the previous period to end-March, driven by the demand for space in the industrial sector in particular. The office market was still in the doldrums, and IPF said it had offered high incentives to secure new tenants. The adoption of the hybrid work model by some businesses as a result of the pandemic continues, in addition to the weak local economy, continue to hurt the office market, it said.
The valuation of SA property portfolio, which straddles retail, office and industrial sectors, was steady at R15.2bn and accounts for 57% of group’s asset base.
IPF, which listed on the JSE a decade ago, declared an interim dividend of 49.77c per share, equating to a total payout of R401m, which is up 11% year on year. For the full year, it aims to grow the divided per share by 10%-12%
Its share price rose 3.19% to R11.65 on the JSE on Wednesday, valuing IPF at about R9.37bn
Update: November 17 2021This story has been updated with closing share price information.
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