Equites Property Fund (EQU) H1 2025 earnings summary

Executive summary

• Interim DPS declared at ZAR 0.665 (66.50c), up 1.7% year-over-year, maintaining a 100% payout ratio, supported by rental growth and new developments.

• NAV per share declined to ZAR 16.32, mainly due to the upfront impact of the ENGL sale/disposal and FX movements.

• LTV increased to 41.0% but is expected to reduce to ~38% by February 2025 through disposals and capital recycling.

• Portfolio focus shifting to South Africa, with robust development pipeline, strong tenant demand, and simplification of core business.

• ESG initiatives advanced, including increased solar capacity (23.5 MW) and first EDGE net zero carbon certification.

Financial highlights

• Net property-related income rose 8.3% year-over-year, driven by like-for-like growth in SA and the UK, offset by higher admin and finance costs.

• Distributable earnings up 5.4% to R538.4m, supported by new developments and successful lease renewals.

• Interest coverage ratio improved from 2.2x to 2.4x; ZAR cost of debt at 9.09%, UK cost of debt at 3.92%.

• ZAR 2.2bn in cash and undrawn facilities as of August 2024.

• DRIP program raised ZAR 337m in new equity in June 2024.

Outlook and guidance

• Full-year DPS guidance reaffirmed at the upper end of 130–135 cents.

• LTV targeted to decrease to ~38% by year-end through further disposals in SA and UK.

• Two-year SA development pipeline estimated at ZAR 1bn per year, with over 150,000 sq m under negotiation.

• Focus on extracting value from UK assets and expanding alternative revenue streams, especially solar and asset management.

• Positive market sentiment in SA and UK logistics sectors, with expectations of interest rate cuts supporting property valuations.