Equites Property Fund positive on listing

By Alistair Anderson

Equites Property Fund (EQU)‚ which listed on the JSE on Wednesday‚ hopes it can use its market dominance in Western Cape industrial property to attract investors to help it grow fivefold within five years.

The real estate investment trust (Reit) develops and manages mostly industrial distribution warehouses‚ making it the first industrial property-focused property fund on the JSE. It is the fifth property company to list this year. Investors have flocked to these listings‚ in search of liquidity.

CEO Andrea Taverna-Turisan said Equites had listed at a yield of 8.8% one year forward. The listed property sector was trading at 7.7%. “We see ourselves as a capital and income play‚” he said. “Liquidity is our challenge now but the strategy is to develop warehouse properties and grow to R5bn in the next five years.

“To do this‚ we must gradually move into Gauteng and Durban‚ which should happen within the next year.”

The listing was more than three times oversubscribed. The new listing ended its first day on the JSE at R10.75 with 41‚467 shares worth R453‚277 traded. Its highest price was R11 and lowest R10.21. Equites’ three major shareholders of reference who supported the initial public offering‚ said Mr Taverna-Turisan‚ were Foord‚ Coronation Fund Managers and Allan Gray. Brimstone Investment Corporation took 5% of the listing.

“I think people like something different. The focus is on industrial properties‚ an underrated property class‚” he said.

Meago Asset Management director Thabo Ramushu said Equites’ industrial focus was appealing but tenants might find its rentals expensive and the fund would have to work hard to raise liquidity. “Equites is a specialised industrial fund with high-quality industrial properties‚ with the strategy to remain industrial.

“This differentiation is appealing because‚ globally‚ specialist funds are better rated than balanced funds‚” Mr Ramushu said. “However‚ Equites will be listing at an annualised forward yield of 8.8% which is quite full.”

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