Archives for May 2022

Become a SAREIT Advisory Member

Advisory membership

The SAREIT Advisory Membership has been established to strengthen relationships with REIT advisors to better address industry matters and participate in the real estate sector’s growth and cohesion.

Advisory members will have the opportunity to be involved in high-quality, independent research related to the South African listed property sector and support REITs in engaging with legislators, regulators, and stakeholders.

These initiatives are essential to strengthening and establishing stable and conducive policies and a robust business environment.

Sustainable solutions

Design and deploy sustainable solutions with like-minded partners and stakeholders.


Facilitate high quality independent research to enable enhanced insights relating to the SA property sector.

Best practice frameworks

Establish best practice frameworks and recommendations for improved transparent and comparable reporting.


Collaboratively strengthening our voice for greater impact in shaping legislation and regulation to create a robust business environment in the Real Estate Section.


  • Participate and contribute to key SAREIT research projects
  • Co-opting mechanisms on SAREIT committees
  • Showcase your expertise and specialist services
  • Preferential sponsorship opportunities
  • Exclusive membership rates and access to member-only functions and events
  • Exposure to SAREIT’s digital platforms and directory listings
  • Access to various networking opportunities.

To join us contact Joanne Solomon, Chief Executive Officer on (email) or mobile 082 888 9975.

Download the SAREIT advisory membership brochure and application form.

Octodec’s Digitalisation Initiatives Yield Benefits As The Group Broadens Its Residential Offering And Continues To Pay Down Debt


Tuesday, 10 May 2022 – JSE listed REIT Octodec Investments Limited, today announced its interim results for the six months ended 28 February 2022, against the backdrop of subdued market recovery. While the fourth wave of Covid-19 (November 2021-January 2022) was expected to further slowdown the local economy, only minor restrictions were placed on tenants’ businesses resulting in a limited impact on Octodec’s portfolio. Consequently, fewer rental discounts were granted to tenants over the period.

Revenue earned on a contractual basis after COVID-19 rental discounts increased by 5.1% to R944.4 million from R898.7 million. At the same time, property operating expenses increased by 5.2%, mainly due to increased administered costs such as assessment rates. The group’s bad debts remain under control at 1.9% of gross revenue compared to 2.5% for the prior period.

Speaking to various operational initiatives during the year, Jeffrey Wapnick, Managing Director of Octodec, says: “Octodec has managed to contain most property costs through hands-on management of the buildings, with a focus on maintenance management, ensuring that our buildings remain attractive to its tenants.”


Initiatives such as the introduction of shared and/or furnished accommodation at The Fields and value-added services such as Wi-Fi to tenants in various other buildings has contributed to the increase of Octodec’s residential income by 5.6% on a like-for-like basis. This, together with a focused marketing strategy to increase letting, has also resulted in reduced vacancies in our residential buildings.

Explaining actions taken to retain and attract tenants, Wapnick comments: “There is increased residential supply by competitors in Johannesburg CBD, which is why we are maintaining our competitive edge by providing quality apartments and services at affordable prices, which has been done without major CAPEX. Due to the positive outcome of the above initiatives, we intend to roll out these programmes aggressively to more residential buildings to attract new tenants.”

The residential vacancies decreased to 7% since February 2022. Subsequent to half-year, the occupancy level improved considerably at The Fields with the students’ take-up of shared/furnished accommodation, and at Kempton Place through the increased activity at OR Tambo International Airport, with both ex- and new tenants returning to take up occupation.

Over the last two years, Octodec’s retail portfolio has felt the impact of the lockdown restrictions. Many offices and government departments are still applying the work-from-home policy, at least on a rotational basis. Therefore, footfall has not returned to pre-COVID levels in the CBDs. Nevertheless, on a like-for-like basis and excluding COVID-19 rental discounts, rental income from retail increased by 4.0%.

Wapnick says: “Although there has been a continued downward resetting of rentals across the sectors, it is pleasing to see that from an Octodec perspective, several renewals are being concluded at increased rentals, and we continue to experience demand from large retailers for space in both Johannesburg and Tshwane CBDs.”

Educational facilities and Places of worship are experiencing increased student numbers and congregants respectively. However, the period was characterised by challenging trading conditions and these institutions are only beginning to emerge from the pandemic. Encouragingly, there has been an improvement with new inquiries and collections from these two sectors.

Octodec’s office portfolio has also been adversely affected by the current weak economic climate. In addition, the oversupply of office space has put pressure on occupancy levels, which is in line with the broader sector. Although vacancies have remained stable, rental income has reduced marginally by 1.5% on a like-for-like basis and before COVID-19 rental discounts.

Octodec’s industrial portfolio has performed relatively well. However, there have been negative rental reversions and a resetting of rentals. As a result, rental on a like-for-like basis and before COVID-19 rental discounts decreased by 4.5%. Occupancy in the industrial sector has remained stable, with a number of our industrial buildings 100% occupied.

Wapnick adds: “Even though Octodec’s properties were not directly impacted by the civil unrest in 2021, the impact of the unrest on the economy partially affected Octodec’s collections during this period.”


As a percentage of gross lettable area, including properties held for redevelopment, vacancies have improved marginally to 22.6% compared to 22.8% at 31 August 2021. The group’s core vacancies, which exclude the GLA relating to properties held for redevelopment or disposal, decreased from 16.2% to 15.8%.

The residential sector reflected a considerable decrease in vacancies compared to August 2021. Residential vacancies reflect an improvement from 24.3% at February 2021 to 15.4% at 28 February 2022. Despite pressure on rental income in the industrial sector, the vacancies have decreased from 11.7% to 9.9%. Retail shopping centre core vacancies also improved from 7.3% to 6.0%, with Octodec’s convenience shopping centres being well let.


“Octodec remains focused on its balance sheet optimisation, and disposal strategies to pay down debt and refinance loans where needed. Active balance sheet management and liquidity planning have shielded the business resulting in an improved LTV,” comments Anabel Viera, Financial Director of Octodec.

With the lifting of COVID-19 lockdown restrictions, Octodec has seen an improvement in the conclusion of sales of properties previously identified for sale. Against this backdrop, Octodec has sold and transferred 12 properties for a total net consideration of R121.6 million.


The board of Octodec has declared a cash dividend of 50 cents per share for the year ended 28 February 2022. However, given the broader economic and political uncertainty, the board will not be providing any guidance on distributable income and dividends for the second half of FY2022.

Speaking to prospects in the sector, Wapnick concludes: “Consumer confidence has risen in light of the cancellation of the lockdown restrictions, and there is a renewed energy in the Tshwane CBD. However, the local macro environment remains a cause for concern. With GDP expected to grow at under 2% for the foreseeable future, we do not anticipate significant growth in rental income. In addition, inflation is also expected to increase, which will also impact our costs and ultimately, net property income. With that said, Octodec remains resilient thanks to Management’s intimate knowledge of the underlying assets in the portfolio and the broader property market.”

Equites’ Prime Logistics Portfolio Delivers Exceptional Returns

Highlights for the year ending 28 February 2022

  • Total return of 17.3%, achieving the double-digit total return target.
  • Net asset value per share up 7.9% to R18.61.
  • Annual distribution per share up 5.2% to 162.99 cents, in line with guidance.
  • Conservative capital structure with a loan-to-value ratio of 31.5%.
  • Cash and undrawn facilities of R1.8 billion.
  • Like-for-like portfolio valuations were relatively flat in SA and increased by 13% in the UK, in sterling.
  • UK portfolio generated a geared total return on equity of 25%, in sterling
  • 0% vacancy in SA portfolio as of 1 May 2022, 1 minor vacancy in the UK.
  • 100% pay-out ratio maintained

Cape Town, 3 May 2022 – Equites Property Fund Limited today announced growth in its distribution per share of 5.2% to 162.99 cents. NAV per share increased by 7.9% to R18.61 and delivered a 9.4% distribution yield, culminating in a total return of 17.3% for the year. Equites’ property portfolio has grown from R1 billion on listing in 2014 to R25.7 billion at 28 February 2022, supported by high-quality acquisitions and developments in both its SA and UK portfolios.

Equites CEO, Andrea Taverna-Turisan said that “logistics properties globally continue to outperform, supported by sustained demand in the tenant and investor markets. The UK market is especially strong and has set new records across all metrics, which include a record low vacancy rate, a surge in market rental growth as well as a significant increase in land values. Our partnership with Newlands is capitalising on this golden opportunity where there is a significant mismatch between demand and supply in the market, which will ultimately continue to create substantial value for Equites’ shareholders.In SA, the prospects have never been better in terms of the potential pipeline of developments as well as rental growth expectations, as the national vacancy rate for A-grade warehousing is at an all-time low and companies increase their focus on supply chain optimisation.”

The intensifying demand culminated in the most active year in Equites’ history, with investment opportunities of R4.3 billion funded. The largest transaction in the financial year was the acquisition of the DSV Campus in SA for R2.05 billion, in partnership with Eskom Pension and Provident Fund. The partnership with the Pension and Provident Fund unlocked an attractive alternative source of equity for further expansion. The Group also purchased a 50% stake in three properties in Waterfall from Attacq, for a total consideration of just more than R500 million.

Equites completed a R317 million, state-of-the-art logistics campus let to Sandvik in Gauteng on a 10-year lease during the period. Ongoing developments include a flagship warehouse for Cargo Compass SA (R259 million), a new facility for Nioro Plastics (R88 million), an extension to the Premier FMCG facility in Lords View (R97 million) and an extension to TFG’s facility in Lords View (R190 million), which will all be completed during FY23.

In the UK, Equites Newlands Group Limited (“ENGL”), the venture with Newlands Property Developments LLP (“Newlands”), completed its first development; being a last-mile logistics facility tenanted by Amazon on a 15-year lease with a capital value of R1 billion. ENGL is also in the final stages of completing its second development, a super-hub distribution facility let to Hermes (which recently changed its name to Evri), significantly adding to the scale of the UK portfolio. The property’s expected capital value is c. R2 billion and is let to Hermes (Evri) on a 20-year lease.

To fund its activities, the company raised R2.7 billion in equity capital through two oversubscribed accelerated bookbuilds, as well as dividend reinvestment programmes. The Group also refinanced over R2.5 billion and raised an additional R3.5 billion of new debt facilities during the period. This was supported by a highly successful and well-oversubscribed debt auction in November 2021.

Equites’ portfolio WALE of 13.7 years and proportion of A-grade tenants of 97.2% is unrivalled in the sector. This is further underpinned by the three properties in the Shoprite portfolio with initial lease periods of twenty years. Combined with strong in-force escalations, these aspects indicate a high level of income predictability and a low risk of tenant default.

South African portfolio
The logistics property market continued to be one of the top-performing property sectors in South Africa, as numerous occupiers increased their focus on supply chain optimisation. For the first time in two years, market rental growth is accelerating, supported by an increase in development cost estimated at between 10% and 15%, as well as a lack of suitable vacant A-grade warehousing space in key logistics nodes across South Africa. Properties are currently being marketed at rentals of between 15% and 30% higher than levels in 2021, which is predominantly driven by construction cost inflation and a record low vacancy rate for A-grade warehousing space.
Equites’ 1.2 million square meters South African portfolio is fully occupied (as of 1 May 2022) as tenant demand for A-grade warehousing space exceeds the supply of suitable vacant space, driving upward pressure on rentals at renewals. The Group secured tenants for all three of its speculative developments in SA during the year, with two of the developments already let before practical completion. Like-for-like net rental growth in the SA portfolio was 6.2%, a function of the robust in-force contractual lease escalation rate.

United Kingdom portfolio
Ferocious demand triggered record-breaking performance in the UK logistics market; in terms of the take-up of warehousing space, market rental growth, record low acquisition yields, the lowest ever-recorded vacancy rate, the highest growth in land values, and the largest transactional volumes. Take-up reached a new annual record of 55.1 million square feet (5 million square metres) in 2021, 86% higher than the long-term average according to Savills, one of the world’s leading property advisors. Market rental is expected to grow by 12% in 2022 on a national level according to UK property specialist, Gerald Eve, and this bodes well for Equites’ UK property valuations over the next financial year.

Equites’ UK portfolio performed above expectations, increasing by 13% in value (independently valued) and generating a geared total return on equity of 25%, in sterling. The increase in value was a combination of increased market rentals as well as a compression of prime distribution yields. The portfolio of ten properties is let to blue-chip tenants including DHL, Tesco, Amazon, and Puma, and has predominantly been developed over the last six years, meeting all modern logistics warehousing requirements.

ENGL has enhanced the core UK portfolio’s performance substantially. The combined uplift in property developments during the year was R870 million. During the period, ENGL entered into a sale of land agreement and a development funding agreement to develop two distribution facilities for Promontoria in Barnsley. The expected attributable to Equites is c. £5.0 million (R100 million), on a post-tax basis.

Distribution per share grew by 5.2% to 163 cents (FY21: 155 cents), a function of strong growth in like-for-like net rental income, excellent property performance and efficient capital management. The Board has decided to declare 100% of distributable earnings as a dividend on a biannual basis for the foreseeable future and will continue to promote its dividend reinvestment programme as a tax-efficient mechanism to retain a proportion of distributable earnings for future expansion.

Investment pipeline
The potential pipeline of development opportunities has increased substantially, with capital commitments of R1.4 billion as at 28 February 2022.
In SA, Equites is currently extending a facility for TFG in Lords View and will also develop a new 50 000m² world-class distribution facility in Witfontein for the retailer, with the potential to expand this facility to over 90 000m² over the medium term. The Group has agreed on terms (post-period-end) with a national retailer to develop an 85 000m2 modern logistics warehouse on the remainder of the site, with a total capital value of R1 billion. The developments are being executed on land which Equites controls and will unlock the value embedded in these parcels.

Equites is also currently in the final stages of negotiating five new developments across SA, which are estimated to add more than 160 000m² of prime logistics space to the portfolio over the next two years, with a combined capital expenditure in excess of c.R1.8 billion.

In the UK, Equites estimates that the value of the total potential pipeline of opportunities through the Newlands venture will be more than £1bn (R20 billion) over the next five years. New development opportunities will focus on large-scale, world-class distribution facilities in the UK let to multinational tenants with strong covenants on long-term leases. ENGL recently secured a new land sale and infrastructure development agreement with a retailer for a scheme in Basingstoke. The transaction is forecast to generate an after-tax profit attributable to Equites of R400 million, subject to planning approval. In addition to this transaction, ENGL finalised a turnkey development agreement with Promontoria on the remainder of the Basingstoke site, which will result in a post-tax profit of c.R212 million. The net profit generated from the three turnkey and land disposal transactions is estimated to be more than R700 million, after tax, and will be reinvested in the attractive UK pipeline of investment opportunities.

Capital and funding
Equites continues to maintain a conservative capital structure; with an LTV ratio of 31.5% and weighted average debt maturity of 2.7 years. The Group has debt facilities of R10.2 billion at an all-in effective cost of 5.59%, and cash and undrawn facilities of R1.8 billion to fund acquisitions and developments. At 28 February 2022, the Group had hedged 91.3% and 88.8% of the existing term loan balances and total committed future cash outflows, respectively. Where possible, Equites continues to use natural hedges to minimise exposure to fluctuations in foreign exchange rates on distributable earnings.

GCR Ratings recently upgraded the national scale long- and short-term issuer ratings of Equites to AA-(ZA) and A1+(ZA) respectively, with a stable outlook. GCR highlighted “the sustained improvement in portfolio quality, supported by positive externalities impacting the logistics sector…characterised by growth in rental income, elimination of vacancies and stability of margins” and that “liquidity cover is underpinned by strong access to funding through both debt and equity markets, where the REIT is building a good track record.”

During the year, the Group increased its JSE-listed DMTN Programme to R10 billion and held its first public debt auction raising R1 billion and making Equites the most tightly priced DCM property issuer in the market in the 3-year space.

The Group continues to pursue in-country funding to support property developments in the UK, and the completion of the Amazon Peterborough facility allowed the Group to raise a further £24 million from HSBC. Equites also negotiated a new £10 million 1-year loan with RMB in SA and the roll of a £25 million 1-year loan into a £50 million 2-year loan with SBSA to fund commitments in the UK. Equites issued the first GBP sustainability-linked loan in South Africa (traded with SBSA) and the first Green Loan in the African real estate sector (traded with RMB), evidence of the Group’s commitment to sustainable funding and the incorporation of ESG into all areas of business. In addition, Aviva has obtained preliminary approval from its funders to increase the current loan from £77m to £140m (an additional R1.3bn) and extend the tenor out to ten years at an attractive indicative rate, by providing the Hermes (Evri) Hoyland property as security.

ESG has become one of the Group’s key strategic areas of differentiation. The Group underwent its third annual assessment by global ESG rating firm, Sustainalytics, with an ESG Risk score in the very low category and an improvement of 35% year-on-year, which have now elevated the Group to the top 3% of companies rated by Sustainalytics globally.

Transformation is a key strategic imperative of the Group. During the year under review, Equites improved its BBBEE rating to Level 3 with 66% verified Black ownership.

The Board expects that the Group will achieve between 4% and 6% distribution growth per share for the next financial year. Management is forecasting a positive NAV per share growth for FY23, supported by the development pipeline within the Newlands venture. Equites, therefore, forecast a total return of between 15% and 20% for FY23.