Wrap Text
Sale of distribution warehouse in Hinckley, United Kingdom
EQUITES PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
Share code: EQU ISIN: ZAE000188843
JSE alpha code: EQUI
(Approved as a REIT by the JSE)
("Equites" or "the Company" or "the Group")
SALE OF DISTRIBUTION WAREHOUSE IN HINCKLEY, UNITED KINGDOM
1 SALE TRANSACTION
Shareholders are advised that Equites, through its Isle of Man based wholly owned subsidiary, Equites
International Limited ("Equites International" or "the Seller"), concluded an agreement of sale ("Sale
Agreement"), in terms of which it sold the freehold property known as land on the north west side of
Dodwells Road, Hinckley being the whole of the land registered under title number LT206751 ("the
Property") to Relif UK I B.V. ("the Purchaser"), a legal entity incorporated in the Netherlands which forms
part of Realterm Europe Logistics Income Fund ("Realterm"), for a purchase consideration of £29,750,000
("Purchase Consideration") ("Transaction").
Equites International owned the Property which comprises a warehouse and office component totalling
27,725m2. The Property is let to Tesco Distribution Limited until 24 December 2023.
The Property was unencumbered, and the Transaction released net cash proceeds of R684 million to Equites.
The Transaction also lowered the loan-to-value ("LTV") ratio of Equites by 1.7% on a pro-forma basis and
increased the weighted average lease expiry ("WALE") of the portfolio.
2 RATIONALE FOR THE SALE OF THE PROPERTY
The Equites board continuously evaluates its portfolio and applies a range of investment criteria against
every property in the portfolio to determine a specific strategy in respect of each property. Factors considered
include, inter alia, length of lease, rental growth prospects, the desirability of location, expectations of the
tenant renewing their lease, potential selling price, and the potential of recycling proceeds from a sale into
superior product and/or at superior returns.
The board decided to dispose of the Property for the following reasons:
- the remaining lease length in respect of the Property is three months, which is well below the UK
portfolio WALE of 15.8 years (as of February 2023);
- notwithstanding several approaches from Equites, the tenant has not yet communicated an intention
to renew the lease. The disposal has therefore de-risked the portfolio from a potential significant
vacancy;
- the Transaction has lowered the Group's LTV ratio by 1.7%, on a pro-forma basis;
- a portion of the proceeds will be utilised to settle further pound-denominated debt facilities,
supporting the strategic rebalancing of the LTV ratios between the two jurisdictions. The remainder
of the proceeds will be reinvested in the development pipeline in South Africa, which consists of
pre-let development agreements with blue-chip tenants on long-term leases;
- the Transaction crystalised a geared internal rate of return in respect of the Property of 12.1%, in
pound terms (assuming an initial LTV ratio of 35% and a weighted average cost of debt of 3.0% over
the investment horizon); and
- the Purchase Consideration represents a 16.2% premium to the last reported book value, in pound
terms.
3 TERMS OF THE TRANSACTION
Equites International sold the Property to the Purchaser for £29,750,000. The Transaction exchanged and
completed on 21 September 2023; on which day the Purchaser became the lawful owner of the Property
against the payment of the Purchase Consideration.
All conditions precedent were duly met, and the Transaction was implemented in accordance with the Sale
Agreement. Rent in respect of the day on which the Transaction was implemented was shared equally
between the Seller and the Purchaser.
4 DESCRIPTION OF THE PURCHASER
Realterm focuses exclusively on acquiring and managing mission critical transportation-advantaged logistics
real estate with high-flow-through characteristics.
John William Cammett, Kenneth Stuart Code and Robert George Fordi are the ultimate beneficial owners of
Realterm.
5 VALUATION
The independent valuation of the Property was recently undertaken by Cushman & Wakefield, an
independent external valuer, in accordance with the "RICS Valuation – Professional Standards, the 2012
Edition" (the "Red Book"). This is an internationally accepted basis of valuation. The independent valuation
of £25,600,000 was in line with the book value as set out in paragraph 6 below.
6 FINANCIAL EFFECTS AND DETAILS OF THE PROPERTY
At 28 February 2023, the fair value of the Property amounted to £25,600,000. The contribution to
distributable earnings for the twelve months ended 28 February 2023 amounted to £2,475,858, with a net
loss after tax of £17,912,131.
Weighted
average rental
Geographical GLA per square metre
Property Name Location (m2) Property type per month*
Tesco property, Hinckley, United
Dodwells Road Kingdom 27,725 Logistics R171.16
*Assuming a GBP/ZAR exchange rate of ZAR23.00.
The Purchase Consideration of £29,750,000 equates to a 16.2% premium to the book value of the asset, as
of 28 February 2023, resulting in the Transaction being marginally accretive to Equites' net asset value per
share.
This information was extracted from the Company's audited year-end results for the twelve months ended
28 February 2023, which were prepared in terms of Equites' accounting policies and International Financial
Reporting Standards.
7 TRANSACTION CATEGORISATION
The Transaction is a category 2 transaction in terms of the JSE Listings Requirements and accordingly does
not require approval by shareholders.
26 September 2023
Corporate advisor and sponsor to Equites
Java Capital
Debt sponsor
Nedbank Corporate and Investment Banking
(a division of Nedbank Limited)
Date: 26-09-2023 05:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
