PRE-CLOSE FEBRUARY 2020 - The Vault
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PRE-CLOSE FEBRUARY 2020
i Introduction/Snapshot slide 3
ii Acquisitions slide 7
South Africa
United Kingdom
iii Unlocking tracts of land slide 12
X57, Witfontein, Gauteng
Meadowview, Gauteng
United Kingdom
iv Innovation slide 22
South Africa
CONTENTS
v Sustainability slide 26
Focus on ESG in the portfolio
vi Strategy and outlook slide 30
INTRODUCTION
SNAPSHOT
Equites continues to deploy capital strategically to add quality and scale to its world-class portfolio of logistics assets. The company has focused on developing and
acquiring A-grade logistics assets let to blue-chip tenants on long dated leases in key logistics nodes, both in South Africa and the United Kingdom.
The property CAGR of both the The selection of
fund assets and the assets have
3
portfolio has grown
1 to R13.5 billion at 31
August 2019, with 62
2 group’s market cap
was in excess of
resulted in stable
rentals and
income producing 50% over the last predictable cash
properties five years flows
We generate Our performance We favour long dated
healthy income indicates that we leases to support
4 growth partly
through escalations
5 own the right assets
in the right locations,
6 income predictability
which is evidenced
of 7.7% across the with vacancy of 0.2% by a WALE of 9.5
SA portfolio across the portfolio years
PRE-CLOSE | FEBRUARY 2020 4
PROPERTY FUNDAMENTALS
Weighted average lease expiry Portfolio value Tenant grade
We focus on long-dated leases to defend income Our portfolio has grown to R13.5bn at 31-Aug-2019 We partner with predominantly blue-chip tenants;
predictability. This is indicated in our increasing through high-quality acquisitions and developments this is evidenced by the fact that 94% of our tenants
WALE which was 9.5 years at 31-Aug-2019 in both SA and the UK are A-grade
Acquisitions and developments completed in the last The contracted development pipeline will add at All our contracted development leases have been
12 months and those we have currently signed will least R2.6 billion of high-quality logistics assets to concluded with A-grade tenants which will further
further bolster the WALE of the portfolio the portfolio support the quality of income
PRE-CLOSE | FEBRUARY 2020 5
SHARE PRICE SNAPSHOT
Relative EQU share price performance
2500
2000
Cents per share
1500
1000
500
0
Jan-2017 Jul-2017 Jan-2018 Jul-2018 Jan-2019 Jul-2019 Jan-2020
J253 EQU
We have consistently outperformed the J253 benchmark over the past three years while liquidity levels continue to increase over time.
PRE-CLOSE | FEBRUARY 2020 6
ACQUISITIONS OVER THE LAST SIX MONTHS
ROCHE AND DHL
• Equites has concluded two development
funding agreements in the UK which will be
completed during March 2020
• The first is a 55 113 sq. ft. DC let to leading
Pharmaceutical company Roche
Diagnostics Limited on a 15 year FRI lease
• The second is a 57 383 sq. ft. sortation
centre let to DHL International on a 15 year
FRI lease
Property Roche DHL
details
Location The Hub, Total Park,
Burgess Hill Leeds
Tenant Roche DHL
Diagnostics International
Limited (UK) Limited
Capital value £13.3million £12.0million
PRE-CLOSE | FEBRUARY 2020 8
SHOPRITE DC PACKAGE
The transaction Key strategic benefits
1
• Shoprite establishes a JV whereby they contribute a portfolio of
DCs and associated undeveloped bulk land in Brackenfell and Equites will add a high-quality portfolio of distribution
Centurion in Gauteng valued at R2.0 billion into the JVCo centres underpinned by long-term leases with Shoprite to
its existing property portfolio
• Equites shall inject cash of R2.1 billion into the JVCo in
exchange for a majority stake
2
• The JVCo shall thereafter acquire the Cilmor distribution centre
and the undeveloped bulk land for an agreed cash Shoprite will unlock significant value from their
consideration of R1.2 billion distribution centres while retaining significant influence
in respect of the Portfolio and by virtue of its significant
shareholding in the JVCo
• Equites and Shoprite shall conclude "triple net" lease
agreements in respect of the Brackenfell, Cilmor and Centurion
distribution centres
3
• the JVCo shall manage the portfolio and shall serve as a
platform for the future development of the undeveloped bulk Equites will have forged a strategic partnership with
land situated at Cilmor and Centurion and for possible future Shoprite which it intends to be mutually beneficial and
acquisition and development opportunities both parties will share in the value created in the JV
going forward
PRE-CLOSE | FEBRUARY 2020 9
COMPETITIVE ADVANTAGE
Superior quality builds Cost-effective funding opportunities created
Enhanced income certainty
Both the logistics campus and the modern The long-dated, annuity income stream
This Portfolio would constitute approximately
distribution centres were all built to Shoprite’s presents significant opportunities to reduce
19% of Equites’ property portfolio and its
exacting requirements and to institutional Equites’ cost of debt funding over the medium to
inclusion thereby improves the WALE from
standards long term.
9.5 years to 11.7 years
Diversification of tenant base Low expected volatility
The inclusion of Shoprite, Africa’s Through the conclusion of three, 20-year
largest food retailer, as one of leases with a predictable, escalating cash
Equites’ major tenants further flow profile, Equites is shielded from certain
diversifies its exposure to credit risk market risks which it would otherwise be
exposed to
PRE-CLOSE | FEBRUARY 2020 10SHOPRITE DC PACKAGE
• Two of the DC’s are situated in Brackenfell
in the Western Cape and one is situated in
Centurion in Gauteng
• The properties will all be let to Shoprite on
new, 20-year leases with options to renew
for a further three 10-year periods
Property Brackenfell Cilmor Centurion
details
Location Brackenfell, Brackenfell, Centurion,
Cape Town Cape Town Gauteng
GLA (m²) 101 797 128 706 169 966
Capital R684 m R1 144 bn R1.360 bn
value
PRE-CLOSE | FEBRUARY 2020 11UNLOCKING OUR STRATEGIC LAND
MEADOWVIEW - GAUTENG
Equites Park – Meadowview is located
adjacent to the N3 highway and the R25
Modderfontein Road. Equites has
concluded three development deals
totalling 56 000m² GLA and two
extensions to existing facilities on the
available land over the past three years.
PRE-CLOSE | FEBRUARY 2020 13ALTRON - MEADOWVIEW
• Equites is in the process of developing a
25 001m² warehouse to be let to Altron
• Development commenced in September
2019 and will be completed in June 2020
• The warehouse will consolidate four existing
Altron DC’s into a single modern logistics
facility resulting in large efficiencies for the
tenant
Property details
Location Equites Park –
Meadowview, Gauteng
Tenant Allied Electronics
Corporation Limited
Capital value R222 million
PRE-CLOSE | FEBRUARY 2020 14DIGISTICS - MEADOWVIEW
• Equites is in the process of developing a
21 026m² warehouse to be let to Digistics
• Development commenced in October 2019
and will be completed in August 2020
• This DC represents the fifth Digistics DC in
our portfolio and reflects our ability to
leverage off existing tenant relationships to
unlock development opportunities
Property details
Location Equites Park –
Meadowview, Gauteng
Tenant Digistics (SuperGroup
Limited)
Capital value R180 million
PRE-CLOSE | FEBRUARY 2020 15PLUMBAGO - GAUTENG
Equites Park – Plumbago is ideally located
next to the R21 and R23 Interchange and
9km from O.R. Tambo International
Airport. Equites has concluded two
development deals totalling 44,000 m² on
the available land during the last six
months.
PRE-CLOSE | FEBRUARY 2020 16IMPERIAL HEALTH SCIENCES - PLUMBAGO
• Equites is developing a 17 628m²
warehouse to be let to Imperial Health
Sciences (IHS)
• Development will commence early in 2020
and will be completed by Q1 2021
• This development represents the second
property in the portfolio let to IHS, who have
just renewed their existing lease at a 7.25%
escalation to their exit rentals
Property details
Location Equites Park –
Plumbago
Tenant Imperial Health
Sciences, Imperial
Group
Capital value R150 million
PRE-CLOSE | FEBRUARY 2020 17SANDVIK - PLUMBAGO
• Equites is developing a 22 599m²
warehouse to be let to Sandvik, a global
mining and excavating company
• Development will commence in 2020 and
completion is expected in Q1 2021
• This development will be the first completed
development at X57, Witfontein, a location
which has proven popular with a wide range
of users
Property details
Location Equites Park –
Plumbago
Tenant Sandvik Group, Sweden
Capital value R275 million
PRE-CLOSE | FEBRUARY 2020 18UNITED KINGDOM
Pressglass plot
• The site is located in Peterborough
Gateway (in which we own two logistics
facilities) which has proven to be a world-
class logistics park
• Planning consent for up to 300 000 sq ft
has already been obtained and currently
working with various potential users to
unlock the site
• Consideration of £7.3 million paid for the
plot
PRE-CLOSE | FEBRUARY 2020 19UNITED KINGDOM
Basingstoke plot
• Basingstoke is situated at Junction 6 and
Junction 7 of the M3 motorway, which
skirts the town's southeastern edge, linking
the town to London and to Southampton
and the south-west
• Looking to unlock 1.25m sq ft of bulk on
this land
• The land is already being marketed to
potential users; close to signing deal with
large multi-national user subject to
planning consent
• Consideration of £14.2 million paid
PRE-CLOSE | FEBRUARY 2020 20UNITED KINGDOM
JCT 24
• Junction 24 is ideally located on the M1, in
the East Midlands
• Planning consent for approximately
850 000 sq ft of bulk is being applied for
• Adjacent to SEGRO’s East Midlands Park
and East Midlands International airport,
which is the second largest cargo airport in
the UK after London Heathrow
• £200 000 10-year option fee subject to
planning consent being obtained
PRE-CLOSE | FEBRUARY 2020 21INNOVATION
APPROACH TO CREATING OUR PARKS
We understand that we need to be introspective about the way in
which we create space and place for the people we cater to.
Where industrial/logistics buildings were seen to be purely
functional and non-human in scale, we want to challenge that
narrative and make a positive contribution to the urban realm.
Our parks will include:
• A truly “Equites” brand identity
• Well-positioned amenities
• Pedestrian friendly user experiences
• Contributions to surrounding communities
PRE-CLOSE | FEBRUARY 2020 23OUR FUTURE – PLUMBAGO
Artists impression of Equites Park - Plumbago
24OUR FUTURE – PLUMBAGO
Artists impression of Equites Park - Plumbago
25FOCUS ON SUSTAINABILITY
SUSTAINABILITY
Our sustainability strategy is aligned to the Global Sustainability Development Goals and aims to improve our ESG performance over time through
focusing our efforts on the key initiatives, through actively seeking opportunities within our processes and operations to make improvements.
We received a 4-star green star rating for Lords Through our commitment to the Michel Lanfranchi
View Industrial Park (both Premier and DHL units) Foundation we will continue to focus on our drive
in January 2020 and sustainability will be at the to enhance educational initiatives in South Africa.
forefront of all our designs going forward.
Through our community outreach program in We have recently instituted a board sub-
Johannesburg, we aim to uplift and empower committee (“Risk Committee”) which will focus
communities in which we operate by constant largely on potential governance risks and
engagement, job creation and community strategies to overcome these. We continue to
involvement. We believe that our developments improve our processes and procedures to
should not only add value to our tenants but also to enhance our human capital and governance
the surrounding communities. processes.
PRE-CLOSE | FEBRUARY 2020 27GREEN STAR RATING
Two of our buildings at Lords View have a verified four-star green star rating and represent the standard which we
will endeavour to achieve on all future developments
28SUSTAINABILITY
What does this mean for the buildings we create?
Management Indoor environment quality
The credits within the management category promote the Each of the credits in the IEG category target the well being
adoption of environmental principles from project to inception, of the occupants. The credits address how the heating,
design and construction phases, to commissioning and operation cooling, lighting and indoor pollutants contribute to a healthier
of the building and its systems indoor environmental quality
Energy Transport
The credits within the energy category target an overall reduction The credits within the transport category reward the reduction
in energy consumption and a reduction of green house gas in automotive commuting while encouraging the use of
emissions associated with energy generation alternative transport
Water Materials
All the water credits aim to reduce the use of potable water The concept is to reduce the amount of natural resources
through design of efficient systems, rainwater collection and used and reuse materials that can be reused or recycled
water re-use
Innovation Emissions
The innovation category encourages recognises and rewards the All the emissions credits targets the environmental impacts of
spread of innovative technologies, designs and processes that a developments emissions or substances emitted from the
impact on the overall environmental performance of the building site
PRE-CLOSE | FEBRUARY 2020 29STRATEGY AND OUTLOOK
STRATEGY AND OUTLOOK
Financial capital
01 We continue to optimize our mix of debt and equity, diversify our use of funding
and position our balance sheet for further acquisitions and development
Manufactured capital
02 Our high-quality logistics portfolio with a WALE 9.5 years and close to zero
vacancy evidences the quality of our developments and acquisitions
Human capital
03 We value our people and continue to attract high quality employees with a
wealth of development, logistics and finance expertise who continue developing
our IP and grow our business with passion
Social and relationship capital
04 We focus on establishing deep rooted trust with key stakeholders, value
stakeholder engagement and have established ourselves as leaders in our
space amongst peers
Natural capital
05 We have codified our approach to sustainability with a key focus on protecting
our natural resources, alternative energy sources and empowering our people
and surrounding communities
PRE-CLOSE | FEBRUARY 2020 31You can also read
