Equites benefits from online shopping


Equites benefits from online shopping

Published Date: 2020-10-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Equites benefits from online shopping

The property group says Covid-19 has resulted in increased demand for prime modern logistics space.

Equites Property Fund says Covid-19 has fuelled growth in online shopping, supporting demand for its warehouses. So, despite a challenging first half, it still managed to collect most of its rent and hold its interim distribution to shareholders steady.

The real estate investment trust (REIT) specialises in logistics properties in SA and the UK. It and has 63 properties under management, with the focus on blue chip clients with long-dated leases.

In the UK, internet sales as a percentage of total retail sales increased to 26% in the first half of the year from 19% last year. While e-commerce penetration in SA remains low, Equites said research suggested online retail sales could reach 5% of total sales this year from 1.4% last year, partly due to Covid-19. However, it expected the strongest driver of demand for logistics properties in the country to stem from retailers improving their supply chains.

Still, the pandemic has presented some risks to its SA business, including cash flow constraints for tenants which may result in late lease payments, tenant failures, and the decision to hold off expansion or renewal plans at existing facilities. In the UK, it said the economic risk presented by a depressed economy as well as the uncertainty relating to Brexit was largely offset through the large-scale adoption of e-commerce and increased demand which had propelled the investment case for logistics properties.

The average collection rate in SA and the UK over the six months to end-August was 99.1% and 100% respectively. It granted rental deferrals of R29 million in SA and £326.000 (R7 million) in the UK, most of which it expected to recover within the current financial year.

Gross property revenue increased by 3.6% to R510 million and distributable earnings rose 13% to R458 million. It increased its distribution per share fractionally to 74.44c, up from 74.43c last year, after declaring 100% of distributable earnings as an interim cash dividend. Its net asset value per share increased marginally to R17.44 at the end of August from R17.37 a year earlier.

Its shares fell 1.8% to R17.19 yesterday.

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