Equites reports strong half-year performance as capital deployment accelerates in local logistics sector

Specialist logistics property fund Equites has released its financial results for the six months leading up to 31 August 2026, pointing to robust operational metrics and strong performance across its domestic portfolio. The group reported a distribution per share of 72.57 cents, marking a 5.1% increase compared to the previous period, alongside a reaffirmed full-year distribution guidance range of 147.7 to 150.5 cents per share. The management team maintained a 100% distribution pay-out ratio while noting that net asset value per share grew by 4.5% to reach R17.43, demonstrating steady underlying growth despite dilution caused by an ongoing exit from the United Kingdom property market. These financial markers reflect a stable operational environment underpinned by high tenant retention and disciplined asset management within the local warehousing and distribution landscape.

Local market dynamics and strategic capital deployment in South Africa

Industrial and logistics real estate continues to outperform other commercial sectors within the South African property market, driven by a persistent structural undersupply of well-located distribution facilities. New construction completions continue to lag behind demand from major retailers upgrading supply chains, third-party logistics firms expanding fulfilment networks to accommodate e-commerce growth, and fast-moving consumer goods operators requiring efficient modern space. This supply-demand imbalance has resulted in low vacancies and sustained rental growth, prompting Equites to accelerate capital deployment into domestic industrial assets. During the reporting period, the company spent R600 million on developments and acquisitions. Seven development projects representing 4.7% of the portfolio are currently underway, equating to a total capital value of R2.4 billion upon completion, with R1.3 billion in remaining spend. These projects are scheduled for completion between September 2026 and August 2027 at yields on cost ranging between 8% and 9%, and are predominantly pre-let to tenants such as Tiger Brands, Takealot, Shoprite, DHL and Premier FMCG.

Balance sheet strength and debt management initiatives

The group's balance sheet metrics strengthened significantly during the half-year period, primarily due to capital recycling activities that reduced the loan-to-value ratio from 35.1% to 28.1%. Equites closed the period with R2.9 billion in cash and undrawn facilities, providing substantial headroom for future investments without requiring immediate recourse to equity or debt capital markets. In June 2026, the company successfully raised R650 million in the debt capital markets at pricing spreads 37 basis points and 21 basis points tighter than its previous three- and five-year issuances respectively. Additionally, interest-rate hedging instruments insulate the group from the South African Reserve Bank's resumed tightening cycle. Management intends to use this financial flexibility to fund further development and acquisition opportunities that meet strict return hurdles, while progressively returning gearing levels to their target range.

International portfolio exit and environmental sustainability integration

The company substantially completed its exit from the United Kingdom logistics market following the disposal of the Aviva portfolio, which comprised five income-producing assets. Management noted that persistently elevated gilt yields and subdued rental growth in the UK constrained capital appreciation and justified realizing available value. Three UK assets remain in the portfolio, including DHL Leeds, where a recent rent review settled at £9.17 per square foot, representing a 53% increase from the previous base rent of £6.00 per square foot. Equites has initiated a disposal process for these remaining assets with an expected sale timeline of 12 months, intending to recycle the proceeds into the domestic logistics market. Alongside these capital movements, the group expanded its environmental sustainability initiatives, installing solar capacity of 28.2 megawatts across 75% of its portfolio. Furthermore, a water re-use treatment facility at the Riverfields precinct is scheduled to become operational during the second half of fiscal 2027 to cover non-potable water requirements, while new developments continue to secure IFC EDGE Advanced Green Building certifications.

Source: SA REIT, 16 October 2026.

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