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EQUITES PROPERTY FUND LIMITED

EQU JSE Listed

Investment Analysis: Equites Property Fund Limited (JSE: EQU)

Date: 9 January 2026 Share Price: ~R18.37 (1,837c) Analyst Role: Senior Equity Analyst, JSE

Step 1: Data Gathering & Source Verification

I have reviewed the most recent financial disclosures and relevant SENS announcements, noting the continued execution of the UK disposal strategy and the release of the August 2025 interim figures.

  • Interim Results: Reviewed the Unaudited Condensed Consolidated Interim Financial Results for the six months ended 31 August 2025 (Released 9 October 2025).
  • Annual Financial Statements: Reviewed the Integrated Annual Report for the year ended 28 February 2025 (Released 14 May 2025).
  • SENS Activity (L12M): Key announcements include the Accelerated Bookbuild (December 2025), results of the dividend reinvestment program (November 2025), and updates on the disposal of the UK development platform.

Data Sources:

  • Interim Results (Aug 2025): https://www.equites.co.za/investor-centre/financial-results/interim-results-2025
  • Annual Reports (Feb 2025): https://www.equites.co.za/investor-centre/integrated-reports

Step 2: Metric Extraction

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | ~R15.9 Billion | The only pure-play logistics REIT on the JSE. | | Dividend Yield (L12M) | ~7.43% | Moderate. Calculated on a Total L12M dividend of 136.46 cents (Interim FY26: 69.04c + Final FY25: 67.42c). Growth in DPS was ~3.8% in the latest interim period. | | Liquidity Check | Liquid | Average daily value traded is robust (~R15m - R20m). The recent bookbuild in Dec 2025 further deepened institutional liquidity. | | P/E Ratio | ~14.7x | Premium Rating. Trades at a higher multiple than the general property sector (typically ~9-11x), reflecting its specialized "defensive" logistics focus and higher quality tenant base. | | Net Asset Value (NAV) | 1,649 cents | As at 28 February 2025. The stock trades at a ~11% premium to NAV (Price/NAV ~1.11x), indicating market confidence in its development pipeline and asset valuations. |

Step 3: Operational & Strategic Analysis

Business Overview Equites is a specialist REIT focused exclusively on prime logistics assets (warehousing and distribution centres).

  • Portfolio: High-spec "big box" warehousing let to blue-chip tenants (Shoprite, DSV, Amazon).
  • Strategic Pivot: The company is in the process of exiting its UK development platform to repatriate capital to South Africa. This is intended to reduce balance sheet gearing (LTV) and fund a robust local development pipeline without raising new equity.

Performance Trend

  • Revenue: Consolidating. Interim revenue (Aug 2025) declined by 5.5% to R1.67 billion. This contraction is deliberate, resulting from the disposal of income-generating UK assets.
  • Earnings & Distributions: Resilient. Despite the revenue drop, HEPS (Headline Earnings Per Share) remained flat (-1.1%), while DPS (Distribution Per Share) grew 3.8% to 69.04 cents. This divergence highlights efficient capital management and the positive impact of lower debt costs post-disposals.
  • Vacancies: Near Zero. The portfolio boasts a vacancy rate of <1%, reinforcing the "defensive" narrative.

Sector Context

  • Logistics Demand: Unlike the office sector (oversupplied), the demand for modern logistics space in SA remains high, driven by supply chain consolidation and online retail growth.
  • Interest Rates: As global rates begin to ease in 2026, the yield spread for Equites becomes more attractive, though its premium valuation buffers it less than cheaper peers.

Step 4: The Verdict

Bull Case (Why Buy): Quality & Focus. Equites is the "sleep well at night" stock of the property sector. It owns the best assets (modern logistics), has the best tenants (long leases), and has virtually no vacancies. The exit from the UK development arm removes a layer of currency and execution risk, simplifying the story into a pure SA growth play with a self-funded pipeline.

Bear Case (Why Sell): Valuation Ceiling. You are paying a premium (1.1x NAV) for this quality. With a yield of ~7.4%, it offers less income than peers like Redefine or Growthpoint (often 10%+). If the SA logistics cycle peaks or if construction costs inflate further, the premium rating could erode. The revenue contraction (-5.5%) shows that growth is currently being sacrificed for balance sheet health.

Fair Value Estimate: R17.50 - R18.50 The stock is currently trading roughly at fair value, pricing in the quality premium.

Final Rating: HOLD A solid core holding for defensive portfolios, but the current price leaves little room for capital appreciation in the short term. Income investors may find better entry points elsewhere, but few offer this level of security.

AI Generated Analysis Last Updated: 2026-01-14