Company profile - Equites Property Fund
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Company profile
Equites is the only specialised logistics REIT listed on the JSE. It has executed its vision of becoming a globally relevant REIT and currently has a footprint in SA and the UK.
Equites Property Fund Limited
Company profile 1
About Equites
Who we are
Equites listed on the Johannesburg Securities Exchange (“JSE”) in
June 2014 and has established itself as a market leader in the logistics
property space. Equites has executed its vision of becoming a globally
relevant Real Estate Investment Trust (“REIT”), with a footprint in
SA and the UK.
The group has curated a high-quality logistics portfolio across SA and the UK, with a focus on
assets that are modern, well-located, and tenanted by A-grade users on long-dated leases. The
group benefits from being a market leader in this class of specialisation, where the group is the
only listed property entity on the JSE to provide shareholders with pure exposure to prime logistics
assets. Since listing, specific focus has been based on ensuring that each acquisition and
development meets the group’s strict investment criteria.
Our portfolio
The growth strategy in SA is to focus on single Our development team in SA continue to
asset acquisitions, high-quality portfolio innovate and push the boundaries to create a
acquisitions, the acquisition of strategic land unique product offering which is unmatched
holdings to capture increasing occupier in the SA context. We apply a strict baseline
demand in key logistics nodes and the specification which is inspired by global
development of prime logistics facilities. best practice and this therefore remains one
Our in-house development expertise and of our competitive advantages. Regarding
the ability to unlock key nodes have been implementation, the baseline specification
instrumental to the group’s success and will is enforced diligently, and the highest
continue to play a role in the group’s ongoing quality materials are sourced to ensure low
profitability and long-term value creation. maintenance and the enhanced longevity
of every item.
Our ability to create value stems from the
acquisition of well-positioned land, which is
suitable for development, the procurement
of tenants through development leases and
managing the construction process through
the entire life cycle.
How to navigate this document
Inputs
Financial Human Intellectual Manufactured Social and Natural
capital capital capital capital relationship capital capital
Sustainability
Community Dedicated Educational Environmental Instilling sound Relationships Shareholder
involvement skilled initiatives awareness corporate deeply value
employees governance rooted in trust creation
Refer to report within this Integrated Report
2 Equites Property Fund Limited
Company profile
Historic timeline
Equites has been relentless in its pursuit to cultivate
a portfolio of prime logistics assets within key logistics
nodes across two jurisdictions.
December
2017
Concluded first UK Development
Funding Agreement for a DHL
logistics facility in Reading
2014
2015
June
2014
Equites listed on the JSE with a February
R1bn portfolio all located in 2015
June
the Western Cape Portfolio value of R1.5bn 2017
July Inclusion in SAPY20
2015
Acquired our first portfolio of
assets in Meadowview, Gauteng
2016
February
2016
Portfolio value of R4bn March
2017
Inclusion in ALSI
April
2016
Completed construction of the
first development deal for The February
Foschini Group in Equites Park 2017
– Lord’s View, Gauteng Portfolio value of R6bn
June
2016
July February
Acquired first UK logistics property
2016 2017
let to Tesco in Hinckley
Acquired 8 properties Commenced marketing and selling
in Waterfall, Gauteng of our commercial portfolio
through a strategic 2017
venture with Attacq
Equites Property Fund Limited
Company profile 3
2018
February
February 2020
2018 Establishment of strategic
Portfolio value of R8bn partnership between
Equites and Shoprite
February
2020
May Concluded strategic
2018 venture with Newlands
Issued our first cash dividend with Property Developments LLP
an election to reinvest the cash in the UK February
dividend in return for Equites 2020
shares Portfolio value of R14.8bn
2020
August
2018 June
Construction completed on our 2019
first UK development funded Secondary listing on the A2X
logistics facility let to DSV
February
2019
Portfolio value of R12bn
September
2018
Acquired first property in
KwaZulu-Natal let to Pick n Pay February
2019
Equites received approval from the
JSE for a R2bn domestic-medium
term note programme
October
2018
Obtained a level 4 B-BBEE rating
with 53% verified black ownership
2019
December
2018
First park owned by Equites to
be fully developed and let in
Atlantic Hills, Western Cape
4 Equites Property Fund Limited
Company profile
Organisational highlights
SA Portfolio1
Gauteng key nodes
The group’s strategy in SA is focused on acquiring large,
8 9
single assets or portfolios which meet strict investment Midrand 5
criteria and developing world class distribution centres JOHANNESBURG
Lord’s View
for blue chip tenants. The group acknowledges that the 3
2
Durban-Gauteng freight corridor is a backbone of the
7 1
SA freight transport network. 40% of the group’s portfolio Longmeadow
value is situated along this corridor. Meadowview 10
4
Pinetown
SOUTH AFRICA DURBAN
6
Atlantic
Hills
7 10
CAPE TOWN
Parow
1 2 3 4 5
Meadowview Longmeadow Meadowview Pinetown Lord’s View
6 7 8 9 10
Atlantic Hills Parow Midrand Midrand Parow, Germiston
7.7% 7.2
Weighted average WALE2 of SA portfolio R8.6bn
SA lease escalation (in years to expiry) SA portfolio value
1 Tenants listed above are a subset of the group’s portfolio.
2 Weighted average lease expiry
Equites Property Fund Limited
Company profile 5
UNITED KINGDOM
UK Portfolio1
LEEDS
Supply chain productivity MANCHESTER 5
The group’s strategy in the UK is to focus on the
development and acquisition of big-box logistics assets 3
and last-mile fulfilment centres close to major 7
conurbations. Equites is acutely aware of the impact of
1
e-commerce on the retail landscape and acknowledges
Stoke-on-Trent
6 Hinckley
the impact this will have on the demand for logistics 4 3
warehouses, which it is well positioned to meet. Through WALES Coventry
BIRMINGHAM
the group’s strategic venture with Newlands, it will look Peterborough
to unlock significant value through developments in
prime locations. 2
5 LONDON
Reading
2 8
Burgess Hill
1 2 3 4
Hinckley Burgess Hill, Swansea Stoke-on-Trent, Peterborough Peterborough
5 6 7 8
Reading, Leeds Coventry Stoke-on-Trent Burgess Hill
5.3% 14.1
Average UK WALE of UK portfolio £310m
acquisition yield (in years to expiry) UK portfolio value
1 Tenants listed above are a subset of the group’s portfolio.
6 Equites Property Fund Limited
Company profile
How we create value
The Equites journey to value creation
Inputs Business activities
Financial capital
k Optimal debt and equity mix
k Diversified sources of finance
k Strong liquidity
k Phased debt maturity profile
Instilling
sound
Social and corporate
Relationship capital Acquisition of vacant land governance
We aim to hold land strategically in key
k Stakeholder engagements
logistic nodes to enable us to readily serve
k Deep-rooted trust existing and new tenants. With our focus
k Reputation as an industry leader being on high-quality A-grade tenants
situated in key logistic areas of SA and the
k Be a socially responsible corporate UK, we aim to offer solutions to improve the
citizen supply chain of our tenants and bring about
efficiencies to their operations.
Manufactured capital
k High-quality logistics facilities
k State-of-the-art pre-let
developments
k Healthy development pipeline
k Planned portfolio acquisitions Community
involvement
Human capital
k Wealth of experience in logistics
k Established property skill sets
k Strong analytical ability
k Focused and collaborative team
morale
Intellectual capital
k Robust culture of corporate Relationships
governance deeply rooted
k Strong ethical foundation and values in trust
k Information technology solutions Educational
initiatives
Natural capital
k Land under management in strategic
locations
k Alternative water and energy sources Property
k Responsible waste recycling
acquisition
Acquisition of
tenanted property
Through comprehensive
feasibilities and due diligence
procedures, we identify strategic
acquisition opportunities and
partnerships to add to our
world-class portfolio.
Equites Property Fund Limited
Company profile 7
Developments
We have a strong development pipeline
Outcomes
and through our internal processes and
professional offering we aim to meet Financial capital
stakeholder needs. Our focus is on
constructing high quality, environmentally k NAV grew by 3.7% in FY20
conscious buildings that are both functionally compared to FY19
designed and aesthetically pleasing. Property k DPS growth for FY20 was 9.4%
management k Our cash and available facilities
remains substantial at R1.5 billion
as at 29 February 2020
k All-in cost of debt fell by 77 basis
points to 5.94% in FY20
Social and
Relationship capital
k Marked increase in brand recognition
during the year
k Sustained investor confidence
k Well regarded in industry as being
leaders in logistics
k Job creation in local communities
Environmental Manufactured capital
awareness k Our portfolio value increased to
R14.9 billion, up 24.4% as at
29 February 2020
k Completed seven developments
Dedicated in total across SA and the UK in
skilled the past during FY20
employees k 1.4% vacancy rate in the group’s
logistic portfolio as at 29 February 2020
k The WALE across our portfolio
increased to 10.2 years as at
29 February 2020
Human capital
k Continued development through
training and education
k We hired a further seven skilled
people to our organisation in FY20
k There is an extremely low staff
turnover across all functions
k We continue to encourage gender
diversity with 66% female employees
as at 29 February 2020
Intellectual capital
k Increased information technology
solutions
k Easier access to information
k Strong corporate governance
principles
k Drive towards paperless operations
Shareholder
Natural capital
value creation Property management k Increased promotion of water saving
Through our constant tenant engagement, we techniques in our builds
seek ways to improve the premises to enable k Obtained our first 4 star “as-built”
them to optimise use of the property to meet green rated building
their business needs. We walk alongside our
tenants in their journey, thereby building k World-class baseline specifications
trusted-longstanding relationships with them. implemented
8 Equites Property Fund Limited
Company profile
Financial capital
Equites has continued to employ Distribution per share
conservative financial risk DPS grew by 9.4% compared with the prior financial year mainly as a result of strong growth in
like-for-like net rental income which is largely a product of the longevity of the WALE.
management policies by
10.0% 0.7% 9.4%
diversifying its sources of funding, 9.0% 0.5% -0.1%
0.4%
1.0%
maintaining strong liquidity, and 8.0%
6.9%
7.0%
phasing the maturity of its debt
6.0%
profile. Equites’ financial 5.0%
performance for the current year 4.0%
3.0%
demonstrates that the group has
2.0%
continued to efficiently allocate 1.0%
capital to create sustainable 0.0%
Like-for-like
net rental
growth
Financial
leverage
Acquisitions
and
developments
Decrease in
cost of debt
Impact of
exchange
rates
Other
impacts
Actual DPS
growth
income growth while focusing on
long-term capital appreciation as
a result of sound investment
decisions, optimising the cost of Net asset value per share
NAV per share increased from R16.92 at 28 February 2019 to R17.55 at 29 February 2020, an
capital and through effective
increase of 3.7%. The growth in NAV per share is largely a product of the capital appreciation of
property and asset management. the portfolio, the impact of rand depreciation and the effects of the equity raise.
20.00
FY20 Highlights 19.00 1.51
18.00 0.25 17.55
0.18 0.19
16.92
Achieved growth in DPS 17.00
-1.45
-0.05
16.00
Rand per share
of 9.4% 15.00
14.00
13.00
3.7% growth in NAV 12.00
per share 11.00
10.00
At 28 Feb
2019
Net
operating
income
Dividend
paid
Fair value
uplifts
Impact of
exchange
rates
Equity
capital raise
Other
impacts
At 29 Feb
2020
LTV at 29 February 2020
at 26.1% (including equity
capital raise) Loan-to-value
Paramount to the group’s financial stability is its LTV. A conservative LTV provides the group with
the necessary flexibility required to facilitate a strong development pipeline and to take advantage
R1.5 billion of cash and of future growth opportunities.
available facilities at 40%
29 February 2020 (including 30% 26.9% 26.1%
equity capital raise) 23.5%
20%
10%
All-in cost of debt fell from Feb-18 Feb-19 Feb-20
6.7% to 5.9% at 29 February The LTV at 29 February 2020 was 26.1% (including the equity capital raise) which is well within the
2020 group’s target range of 25% to 35%.
The group had available undrawn facilities of R1.4 billion at 29 February 2020 and R2.9 billion of
the group’s properties were unencumbered at 29 February 2020, providing significant flexibility for
the 2021 financial year.Equites Property Fund Limited
Company profile 9
Social and relationship capital
Social and relationship capital refers to our relationship with all FY20 Highlights
stakeholders. This includes human capital, our tenants, financial
institutions, investors, suppliers, communities in which we operate
Sustained investor
and broker networks. Our engagement with stakeholders is confidence
paramount to achieving success.
Marked increase in brand
Tenants Suppliers
Our tenants continue to prefer the high-quality Suppliers play a pivotal role in enabling us to recognition
A-grade logistics facilities that we develop in key deliver an unrivalled portfolio of truly distinctive
logistics nodes in SA and the UK. Our ability to A-grade logistics facilities to our tenants, as well
work productively with our tenants to provide as to ensure the efficient operation of these
Well regarded in industry
the logistics facilities that they require forms the properties. We are able to enhance occupier as being leaders in
linchpin of our long-term success. We strive to demand for our facilities largely as a result of
make our facilities the destination of choice for the high standards that our suppliers adhere to
logistics
our tenants. We regularly interact with tenants both in the day-to-day operations and in the
to ensure that their logistic needs are being met construction of major developments. Our
New development
and any queries are timeously resolved. During dedicated operations managers and our
the current year, we were given the go ahead to development team regularly engage with opportunities resulting
extend an existing facility and develop two new suppliers to ensure an ongoing mutually from tenant relationships
facilities for a single tenant. beneficial relationship. During the COVID-19
lockdown, Equites provided property
Financial institutions management and development vendors with Job creation and social
Banks and other financial institutions are donations to ensure these vendors are in a
regularly engaged to provide timely access to position to continue to pay their staff. upliftment
financial capital at competitive rates which
enhances the long-term value that we are able Communities
to generate for all our stakeholders. Our open The communities surrounding our SA logistics
lines of communication and our deep-rooted nodes are an important consideration for the
trustworthiness enables us to successfully development team when conducting their Tenant profile by revenue
exceed other’s expectations. We are able to activities. Through an assessment of the 100% 2.4%
5.3%
leverage our relationship to structure deals in community needs we are able to create jobs 8% 4%
2%
the best interest of our investors. and promote skills development, consequently 3%
improving the social economic environment of
Investors those living in these areas. Our drive towards 80%
Investors provide us with the ability to create community upliftment enables us to focus our
value and deliver strong income growth from a efforts not only on our development activities
portfolio of high-quality logistics assets through but also on the betterment of those affected
the investment of financial capital. We by our operations.
60%
continuously engage with both existing and
potential investors to understand their needs Broker network
and concerns as we strive to enhance our Our professional broker network acts as an 92% 94%
90%
symbiotic relationship. We regularly engage intermediary between us and prospective
40%
with investors through investor presentations, tenants in relation to fulfilling vacancies and
road shows and direct contact with key new development opportunities. Our
investors. relationship with our professional broker
network is therefore critical to us ensuring that
20%
we are able to secure investment grade tenants
on long dated, fully repairing and insuring
leases which is the cornerstone of our logistics
portfolio. Our dedicated business development
team is responsible for creating and enhancing 0
our broker network. Feb-18 Feb-19 Feb-20
M A M B M C10 Equites Property Fund Limited
Company profile
Manufactured capital
Equites has curated a high- Our ability to create value stems from the The demand that has been placed on the
quality logistics portfolio across acquisition of well-positioned land, which is logistics asset class in the UK both by
suitable for development, the procurement of institutional property investors and leading global
SA and the UK, with a focus on tenants through development leases and property investors, together with the scarcity of
assets that are modern, well- managing the construction process through investment-grade facilities which meets Equites’
the entire lifecycle. investment criteria, have compressed yields to
located, and tenanted by
a level that makes it difficult for Equites to
A-grade users on long-dated We apply a strict baseline specification which compete for new product. This scarcity has
leases. The group benefits from is inspired from global best practice and this become more pronounced as UK REITs and
therefore remains one of our competitive other property companies have entered into
being a market leader in this advantages in SA. Equites has successfully exclusivity agreements with leading developers
class of specialisation, where the achieved its first Edge Advanced Certificate for in the UK. Equites’ decision to partner with a
company is still the only listed the Equites Park Lords View facility let to best-in-class development team in Newlands
Premier Foods; and have since implemented provides us with the opportunity to unlock
property company on the JSE to this accreditation standards across all new value on land holdings in the UK in the
THIS CERTIFIES THAT
provide shareholders with pure developments. coming
Equites years,
Park thereby
Lords Viewensuring
– Premier thatFoods
we are
THIS CERTIFIES THAT
exposure to prime logistics. able to continue to grow theHAS UKACHIEVED
portfolioAN by
Equites Park Lords View – Premier Foods
developingEDGE ADVANCED CERTIFICATEvalue.
assets at a discount to market
HAS ACHIEVED AN
CERTIFICATE NUMBER
EDGE ADVANCED CERTIFICATE
FY20 Highlights GP2-ZAF-19061210070587
CERTIFICATE NUMBER
THIS CERTIFIES THAT
GP2-ZAF-19061210070587
Equites Park Lords View – Premier Foods
Increase in WALE from HAS ACHIEVED AN
EDGE ADVANCED CERTIFICATE
8.8 years to 10.2 years EDGE ADVANCED CERTIFICATE NUMBER
Exemplifying achievement in the GP2-ZAF-19061210070587
EDGE ADVANCED
following areas:
8.7% growth in Exemplifying achievement in the
following areas:
income-producing GLA 43%
to 700 149m2 Energy Savings
43% ADVANCED
EDGE
Energy Savings
Exemplifying achievement in the
following areas:
24.4% increase in portfolio 47%
43%
Water
47% Savings
value to R14.9 billion Energy Savings
Water Savings
52%
Less
52%Embodied
47%
Energy
Water
Less Embodied in Materials
Savings
Energy
337.57 tCO₂/yearin Materials
Operational CO₂ Emissions
52%
337.57 tCO₂/year
490.81 tCO₂/year
Operational CO₂
Operational CO₂ Savings
Emissions
DEVELOPED BY
Less Embodied
490.81 tCO₂/year
Operational CO₂ Savings Equites PropertyDEVELOPED Fund
BY
DEVELOPED BY
Energy in Materials Equites Property
Equites PropertyDEVELOPED
Fund
Fund
CERTIFIED BYBY
337.57 tCO₂/year
Operational CO₂ Emissions
Green Business Equites Property
Certification Inc. Fund
(GBCI)
CERTIFIED BY
CERTIFIED BY
Green Business Certification Inc. (GBCI)
490.81 tCO₂/year Green Business Certification Inc. (GBCI)
CERTIFIED BY
Operational CO₂ Savings
Green Business Certification Inc. (GBCI)BY
DEVELOPED
Equites PropertyDEVELOPED Fund
BY
Equites
Mahesh Ramanujam, President and CEO, Property
Green Business FundInc.
Certification
Mahesh Ramanujam, President and CEO, Green Business CERTIFIED
Certification BY
Inc.
DATE OF ISSUE: 15-MAY-2020
Green
Mahesh Ramanujam, Business
President Certification
and CEO, Green Business
DATE OF Inc. (GBCI)
CERTIFIED
ISSUE:Certification
15-MAY-2020 BY
Inc.
Green
Mahesh Ramanujam, Business
President Certification
and CEO, Green Business
DATE Inc.15-MAY-2020
(GBCI)
Certification
OF ISSUE: Inc.
DATE OF ISSUE: 15-MAY-2020
Mahesh Ramanujam, President and CEO, Green Business Certification Inc.
Mahesh Ramanujam, President and CEO, Green Business
DATE Certification
OF ISSUE: Inc.
15-MAY-2020
Edge Advanced Certificate for the DATE OF ISSUE: 15-MAY-2020
Equites Park Lords View facilityEquites Property Fund Limited
Company profile 11
Property classifications
Property type Description
Modern distribution Well located properties with high specification levels including ultra-flat floors, large volumetric capacity, deep yards and
centre advanced fire protection. Site coverage typically averages 50%.
Logistics campus Properties that include both a modern distribution centre and the tenant’s head office (national or international). Given the
number of head office staff, these properties also typically have a larger number of parking bays and other value adding
elements. The office components are exclusively A- and P-grade, which increases the average value significantly.
Cross docking/ Properties that are designed to meet the needs of a 3PL or last-mile fulfilment occupier and necessarily have a site coverage
ultra-low coverage of below 35%. This category includes cross-docking facilities and city distribution units where the value of the yard increases
the comparable value on a GLA basis.
Other All properties that are not used for logistics. This category includes a jet hangar, a bakery and the commercial property in our
portfolio.
Portfolio movements
All acquisitions and developments are expected to create value and increase the overall quality and defensiveness of the portfolio. When evaluating
the feasibility of a transaction, we determine an acceptable rate of return over the investment horizon by calculating the weighted average cost of
capital and adding an appropriate risk premium which considers the location, lease length, lease escalation rate, covenant strength and any other
factors that might materially alter the investment risk.
4%
5%
4% 6%
5%
3% 4% 3%
4%
4% 6%
7%
FEB 20
FEB 19 R14.8bn
FEB 18 R12.0bn
R8.1bn
81%
82%
82%
Logistics Land immediately available Non-core assets
Properties under development Land for future use Held for sale12 Equites Property Fund Limited
Company profile
Manufactured capital continued
During FY20, Equites has delivered a total of In the UK, Equites concluded two acquisitions we expect a deal to be imminent. The second
seven assets with a capital value of R1.3 billion. of land and entered into options over four transaction relates to the acquisition of a
Due to the exacting nature of these buildings other land parcels as part of our strategic 6.7 hectare plot in the Peterborough Gateway
and the highest quality standards adhered to in venture with Newlands. The first transaction logistics park for a price of £7.3 million. All the
all new builds, Equites view this as an related to the acquisition of 12 hectares of requisite approvals are in place on this land
increasingly important source of the portfolio’s land in Basingstoke for a consideration parcel and the negotiations for a pre-let
growth in future years. £14.2 million. While planning approvals are development are underway with a large
only expected later in 2020, the land has e-commerce logistics user.
already been marketed to interested users and
Portfolio developments and acquisitions
Mar Apr May Jun* Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb March
2019 2020 2021
The Hub, Unit 1
Peterborough Gateway 2
Belville 3
Meadowview West 3
Meadowview West 8
Meadowview West 19A
Meadowview West 19B
Super G
Parc Felindre
Waterfall 8B
Airport Industria 2
The Hub, Unit 3
Total Park
Riverfields 1
Riverfields 2
Philippi 2
* Expected completion dates of ongoing developments is based on indicative assessments. Commenced development Completed development AcquisitionEquites Property Fund Limited
Company profile 13
Property fundamentals Our WALE of 10.2 years and proportion of Our portfolio is concentrated in key logistics
One of our competitive advantages relates to A-grade tenants of 94% remain sector-leading. nodes which are typically nodes with excellent
how we manage our properties. We are We invest in locations that evidence strong road infrastructure, access to sufficient
selective when assessing the tenants that we potential for capital and rental growth and electricity and water supply, labour within
would like in our portfolio and we render a which serve as proven nodes given their close proximity and areas expected to benefit
personalised service to each tenant to ensure proximity to road networks, densely populated from strong occupier demand. While the UK
the highest levels of tenant satisfaction. By areas and accessibility to a large labour force. portfolio continues to grow, the SA portfolio
constantly assessing the portfolio and This suggests a high level of income still contributed 74.5% of our total revenue for
managing individual sites, we strengthen our predictability and a low risk of default. Less the financial year ended 29 February 2020. The
competitive position, attract, and retain quality than 14% of our leases (based on contractual largest single geographic concentration is
tenants, maintain the integrity of the buildings, revenue) expire in the next three years. Gauteng, with 48.3% of our portfolio currently
and consequently, support our property values. situated in the region. We view this region as
the hub of SA logistics and we continue to
focus our growth efforts there.
Lease expiry by revenue
80%
70%
65%
60%
60% 55% 53%
40%
20%
0
Feb-16 Feb-17 Feb-18 Feb-19 Feb-20
M Within 1 year M Within 2 years M Within 3 years M Within 4 years M Within 5 years M Beyond 5 years
Geographical location by value
Gauteng
KwaZulu-Natal United
Kingdom
Western Cape
Feb-20 16% 40% 2% 42%
Feb-19 18% 47% 2% 33%
Feb-18 23% 48% 29%14 Equites Property Fund Limited
Company profile
Manufactured capital continued
Modern distribution centre
Baseline specifications
Perimeter walls 15.5m clear Free solar PV
constructed using springing/eave systems
tilt-up panels height
FM2 floor with a load-bearing Energy efficient LED
capacity of 90Kn/m2 lighting in warehouseEquites Property Fund Limited
Company profile 15
Mechanically-ventilated 7m canopies 45m minimum
warehouse over dock yard depth
levelling doors
Kelley 18m canopies over
dock-levellers on-grade doors
Sectional doors with
viewing panels16 Equites Property Fund Limited
Company profile
Human capital
FY20 Highlights Human capital refers to the knowledge, skills, training and
experiences held by individuals within our organisation. Our human
Improved racial and capital is undoubtedly one of the key drivers of the group’s
gender diversity within exceptional financial performance. We continuously engage with our
our workforce people to improve employee motivation, reduce staff turnover and
create an environment that is conducive to our people maximising
Seven new hires their potential.
Equites is committed to hiring competent staff Education is a key driver to maximising our
Low staff turnover and retaining these talents with an inclusive people’s potential and to encourage individual
work ethic and continuous training and growth. The group has an in-house training
development. Our ability to create this programme to enhance employees’ knowledge
environment is evidenced by our growing of the industry, understand key trends in the
work force combined with low staff turnover. sector, transfer basic accounting and legal skills
Equites prides itself on being able to promote to non-specialists, and to enhance the use of
from within. software to provide more efficient business
solutions. The training sessions are facilitated
Employment equity remains a key priority in by individuals within the group and are based
the recruitment process. We are proud of our on topics driven by the collective workforce. In
diversity and inclusivity – this is evidenced by addition, the group encourages its staff to
the growth in female staff members as well as further their education and provides funding
black1 staff members compared to the prior and support services to employees who wish
years. to further their education.
Employees are regularly asked to recommend
topics which they would like to receive training
for, and soft skills training was a common
response. During the current year, Equites
initiated Emotional Intelligence training for all
staff members, hosted by an independent
third-party. Refer to our Integrated Report
for further details.
Employee composition
70%
66%
60% 63% 62%
58% 59%
55%
50%
50%
47%
40%
30%
20%
10%
2017 2018 2019 2020 2017 2018 2019 2020
Female Black
1 Black as defined in the BBBEE ActEquites Property Fund Limited
Company profile 17
Our team
Equites had a staff compliment of 3 people on
listing with a single head office in Cape Town
managing 20 properties exclusively located in
the Western Cape. Today, Equites has a largely
transformed workforce of 30 employees located
in the Western Cape and Gauteng managing
63 income-producing properties and 6
ongoing developments located in the Western
Cape, Gauteng, KwaZulu-Natal and the UK.18 Equites Property Fund Limited
Company profile
Intellectual capital
FY20 Highlights Intellectual capital is defined as the organisation-wide knowledge
such as policies and procedures, organisational culture and
Strong corporate information technology. Equites strives to continuously enhance its
governance principles policies and procedures to provide an all-inclusive, fair and
transparent work environment. We invest in information systems
Increased efficiency which assist in streamlining our processes, provide an efficient work
through information environment and facilitates the seamless sharing of information.
technology solutions
Policies and procedures Technology
Equites’ policies and procedures have been The majority of information technology
Information is accessible implemented to ensure a safe and fair solutions employed by the group are cloud-
environment for all stakeholders. These are based. This enables staff to access information
from anywhere aligned with our governance framework which from any location and from any device,
is essential for achieving our long-term allowing them to be closer to information and
strategic goals. We facilitate regular interactions increasing efficiency.
In line with sustainability
with our staff to maximise the effectiveness of
initiatives, move towards these policies and procedures and to Technology is incorporated at every step of our
being fully paperless determine ways in which these can be value creation process. During the development
continuously improved upon. phase of a property, software has been designed
to enable contractors to interact directly with
Organisational culture the development team, from the initial design
Our culture is constantly evolving in order to phase of a development all the way through to
create an inclusive environment in which completion. This ensures that all members of
employees feel heard, appreciated and the development and construction team are in
encouraged to perform at their optimal levels. constant communication and promotes
The board sets the tone at the top and a effective collaboration.
unified message is conveyed to all employees
and stakeholders throughout the organisation. During FY20, Equites has introduced AI1
Employees are regularly surveyed on their technology to automate data capturing
understanding of the culture and workshops processes and to assist the group in its efforts
are held to brainstorm methods and means of of going paperless, streamlining processes and
improving this culture with a view of improving efficiencies.
continuous improvements.
Intellectual capital during the COVID-19 lockdown
On 23 March 2020, President Cyril Ramaphosa announced the nationwide lockdown effective at
midnight on 26 March 2020. Many organisations were not in a position to accommodate their
staff to work from home once the lockdown took effect and last-minute arrangements and
changes had to be made for this to happen. Equites was in a fortunate position that with the
intellectual capital employed, the transition to work from home was seamless.
Each employee has a All operating systems, The majority of Equites’ Open communication
company-provided laptop and software employed and processes became paperless amongst all levels of staff has
additional arrangements were document storage solutions during the last year. This been emphasised to ensure
made to provide those are cloud-based and allowed for processes to Equites operates effectively
individuals, with no internet accessible from anywhere. continue to operate under during this period.
access at home, with mobile lockdown with minimal
internet devices to ensure change.
accessibility.
1 Artificial intelligenceEquites Property Fund Limited
Company profile 19
Natural capital
Equites views our natural capital as renewable and non-renewable FY20 Highlights
naturally occurring resources on our planet. As inhabitants of our
planet, in each stage of our developments and/or property
World-class baseline line
management operations we continually assess the impact on our specifications applied to
environment when making decisions and how these natural builds
resources can be used effectively with minimal disruption and
damage. In these impact assessments, we consider the preservation Efficient and effective use
and continuity of our natural commodities and aim to minimise of materials to ensure
wastage wherever possible. longevity and low
on-going maintenance
Land Water
As a key component of our business relates to The water crisis that prevailed in various parts
property development, land is essential to the of SA over the past few years has been an eye- Obtained first 4 star
growth of our portfolio. Equites strives to opener to many in terms of the scarcity of,
“as-built” green rated
acquire land in key logistics nodes with well- what most people see as, an abundant natural
developed infrastructure and access to resource. This prompted Equites to implement building
services, but also pays significant attention to proactive water saving methods and equip
the environmental impact of developments to properties with access to alternative water
ensure that our activities have minimal impacts sources. As a result, it not only necessitates
on the surrounding flora and fauna. preservation of our existing water reserves but and future neighbouring buildings in the park,
also enables continuity of our client’s thereby reducing demand on the local grid
Instead of importing materials to fill a site or operations in the event that a similar crisis and decreasing our greenhouse gas emissions
exporting excess material to dump sites, we resurfaces. associated with energy generation.
either sustainably source materials locally from
nearby sites or re-use and repurpose materials The majority of our industrial parks in SA have All new developments are built with energy
excavated during the groundworks phase of a access to boreholes which provides additional efficient lighting and full LED1 fittings. On
development. We also try to repurpose land for non-potable water to the surrounding existing buildings, Equites recommends that
optimal use within that development or properties. Most of our properties make use of clients replace old fixtures with LED’s to reduce
investigate ways that it could potentially be used rain harvesting to increase their water capacity electricity consumption and increase longevity
for other development sites within the group. and newer developments include a water of the fixtures.
Materials would include sand to fill a site, reserve tank which ensures that the property
topsoil which is re-used for planting purposes, has access to municipal water when supply is Currently, the majority of properties have
vegetation which is replanted and rocks that cut. There are also a few instances of diesel reliant back-up generators installed to
can be used as part of landscaping features. properties that have well points installed. minimise the impact of load-shedding and to
Equites continues to increase water reserve ensure business continuity in the case of
The group aims to use resource efficient capacity at selected properties depending on power outages.
materials in its development with a large focus clients’ needs.
on recycled content in the steel structures and Monitoring
reinforcement of concrete, without Storm water systems at newer developments Equites is in the process of rolling out smart
compromising quality. Where sites are are designed to eliminate excess grease, oil, meter reading devices to its properties which
demolished, Equites aims to recycle materials sediment and litter before draining to onsite will be continually monitored by outsourced
by crushing it and incorporating it into the retention ponds to alleviate stress on the meter reading companies. Any abnormal
new development. system and pollution. usage will be detected timeously and any leaks
and/or disruptions can be addressed efficiently
On an on-going basis, Equites plants and Energy (sun, coal and diesel) to avoid unnecessary wastage.
maintains the landscapes at all parks. Similar to the solar energy generation system
Landscapes are designed to minimise irrigation installed in Premier FMCG, our 4-star “as built” Refer to the Sustainability report on pages
to ensure water conservation. We also green star rated building in Equites Park – 20 to 26 for further information on how
contribute towards the upkeep and Lords View, Equites plans to incorporate solar natural capital is employed within the
maintenance of natural habitats surrounding systems in future developments of the same organisation.
our parks. nature. This system provides energy to the
building on which it installed as well as current
1 Light Emitting Diode20 Equites Property Fund Limited
Company profile
Sustainability report
The 2020 financial year was marked by a challenging economic Through our engagements
environment with many challenges such as load shedding, rising we are able to:
unemployment rates, muted GDP, COVID-19 and dampened
Improve the effectiveness
consumer confidence. Despite these challenges, Equites has managed 1 of our relationships
to grow its portfolio and achieve positive financial results for
shareholders. This cannot be said, however, without mentioning our
2 Generate shared value
impact on other stakeholders and our drive not only towards our
bottom line but also towards creating sustainable value.
Manage regulatory and
When we started six years ago as a niche REIT journey over the next few years to share focus 3 compliance risks
focused on logistics, we concentrated on with not only NAV and profit growth but wider
building a reputable brand with a high-quality value creation. Whilst we recognise that the
Protect interests by
portfolio. However, we also recognise that impacts of this will not be immediate, we 4 addressing concerns raised
without consideration of the environment, our believe that our steady and consistent effort
employees, tenants, the communities in which towards stakeholder value creation will yield
we operate and our suppliers, we cannot exist. long term positive results. This will be an Maintain a good reputation
As such, sustainable value creation has iterative process and we will continuously 5 and trusted brand
become an increasing focus for the group and monitor and evolve our sustainability strategy
in these tough economic times, instead of to adapt to our environment.
accepting the potential risks presented, we 6 Create strategic partnerships
found ourselves capitalising and seeking Material focus for our sustainability
opportunities to add value to our stakeholders. strategy
Equites regularly engages and communicates These engagements also assisted us in focusing
To better amalgamate our core business with with various stakeholders to proactively on our sustainability efforts. Through our
our sustainability focus, we underwent an maintain long-standing relationships to meet engagements, we underwent a process to
internal review of how we can best focus our their expectations. We believe that this is key identify the impacts our operations may have
efforts to create sustainable value and devise a to building trust and by integrating stakeholder on stakeholders and we devised key material
strategy around this. This included engagement into our business practices, we topics to focus on, based on the potential
consideration around the UN Sustainable can better align our interests and create significance of our activities on our
Development Goals (“SDG”) and through mutually beneficial outcomes for those stakeholders and the group.
identifying the areas in which we can make a affected.
meaningful impact, we have embarked on a The following material topics were prioritised
in 2020 and will be discussed throughout this
report:
Material area of focus Boundary
UN Sustainable Development Goals
Ethics and anti-competitive behaviour
Serving our communities
Customer centricity
Transformation
Our employees
Financial value
Environmental consciousness
Refer to our Integrated Report for an
assessment on how Equites has scored
in the above areas.Equites Property Fund Limited
Company profile 21
It was recognised that various stakeholders have differing interests in our group and are impacted in several ways by our business activities. We have
summarised the following stakeholders based on the significance of our interrelationship with them throughout our operations:
Stakeholder Nature of engagement Areas of interest for the stakeholder Actions to safeguard stakeholder interests
− Formal visits and regular inspection of buildings
− Property management and maintenance
− One-on-one meetings − Maintenance plan in place for all properties
Customers − Maintaining trusted customer relationships
between tenants and − Consistent communication and information sharing
(tenants) − Effective communication between tenants and
our property managers between Equites and our tenants
Equites
− Roll out of tenant satisfaction surveys
− Regular meetings
between management − Employee wellness programs introduced annually
− Create a positive and productive work
and workforce − Team building and employee social events are organised
environment that supports employee well-being
− Open-door policy and encourages employees to live our values − Semi-flexible working hours and working from home
Employees
culture encouraged policy in place
− Employee self-development and empowerment
in organisation − Training and development are encouraged throughout the
− Appropriate reward and incentives offered
− Mandatory organisation
performance appraisals
− Due diligence and governance process are followed prior to
− Investor presentations − Yield positive sustainable returns for our making an investment
road shows investors to meet their financial needs by making − Only assets that meet our investment criteria are considered
− Annual general sound investment decisions in investment decisions
Investors
meetings − Engage transparently with our investors and keep − Risk-reward trade-off is considered to target long-term stable
− Direct contact with them informed of our latest performance and returns for our investors
key investors outlook − Regular communication of changes in the group either directly
with shareholders or via media and SENS announcements
− Direct communication − Sourcing of quality tenants with sound financial
Broker − The focus of our lets is on established national/multinational
between Equites backing, leading to infrequent vacancies lower
network used to tenants with good credit ratings and acceptable financial
development team risk of non-payment of rentals
source tenants fundamentals
and our brokers − Potential negative impacts of short-term leases
− Exploration of diversified sources of funding
− Constant face-to-face − Constant monitoring of our loan covenants to ensure we
and telephonic − Cost of funding provided to Equites are not in breach of them
Financial communication with − Equites failing to meet loan covenants − Maintenance of optimal debt/equity structure and ensuring
institutions financial institutions − Changes to the risk profile of the group because that risk is assessed when making capital structure decisions
and other funding of debt/equity ratio being suboptimal − Group policies regarding funding and hedging requirements
sources are adhered to, resulting in responsible and informed
decision making
− Regular engagement
by our operations and − Sufficient time and resources made available to − Regular progress updates with our suppliers and contractors
Suppliers and development teams meet deadlines − Any issues with non-compliance are addressed timeously
contractors with our suppliers and − Compliance to service level agreements − Health and safety standards are always adhered to during
contractors on a one- − Health and safety requirements in place on site site activities
on-one basis
− Minimal disruption to the living conditions and
− Engagement is done lifestyle of local communities − Involvement and consideration of the impact on
Communities through our
− Community involvement and social upliftment communities in areas we develop and let our properties
in which we partnership with
− Communication of the potential impact of − Creation of job opportunities to encourage community
operate Zibula Advisory
Equites’ operations in the affected area and upliftment and skills advancement
(“Zibula”)
transparency from the initial stages to completion22 Equites Property Fund Limited
Company profile
Sustainability report continued
the group, we recognise the need to have the anonymous channels available to them via
Ethics and anti-competitive formal policies and procedures around our organisation. We ensure that our
behaviour potential non-compliance or breaches in these stakeholders are aware of, and comply with,
areas. Consequently, we are in the process of the relevant laws and regulations around the
Capitals mapped: formalising group policies to address this. These protection of human rights and conduct
will be formulated in line with our business themselves in accordance with these
strategy and operations and will be regularly regulations, prior to engaging with them.
reviewed and updated to include any further Through our whistle-blower programs, all
SDG supported: developments in those areas. stakeholders are encouraged to report any
unethical or suspicious activity, on any level
Human rights and in any area of the organisation.
At Equites we support and promote the United
Nations Universal Declaration of Human Plans for the future
Rights where we recognise the need to We are in the process of introducing an
Management approach embrace the dignity and fundamental rights of employee handbook that staff will receive
We understand that underpinning a trusted humankind which we believe will bring about training on to ensure that each employee is
brand and respectable reputation, our ethical freedom, justice and peace. By proactively aware of, and is compliant with, the ethical
foundation needs to be directed by leadership being aware of this, we treat all stakeholders code of the organisation. This will be updated
that cultivates behaviour that promotes the fairly, with respect and we consciously do not continuously as our organisation evolves and
highest ethical standards and conduct. act in ways that could infringe on anyone such new employees will be trained on this at the
Ensuring that we uphold integrity in the way that they feel that they have been unjustly start of their employment with us. Furthermore,
we conduct our activities is critical to us, and wronged. We take acts of violation of human we will monitor our stakeholders to confirm
we hold this is high regard throughout the rights very seriously and if these were to arise, that there are no issues of non-compliance,
organisation. they would be handled as a matter of priority. violations or unethical practices conducted by
Our employees, tenants and suppliers are them and for all new engagements we will
Ethics encouraged to report any acts of known or assess the conduct of those stakeholders prior
Our ethical conduct is the keystone of our suspected violations to human rights through to pursuing a professional relationship with them.
organisation and we are committed to fair and
ethical practices both within the organisation
and towards our stakeholders. Through
recognising the importance of a sound ethical
base, we aim to uphold the highest ethical
standards throughout the group and expect
this from all levels in the organisation. Being a
good corporate citizen is of paramount
importance to us and it is prioritised at all
times. This is led by the social, ethics and
transformation committee who provide
direction and guidance around the
organisations approach to ethics and
maintaining a sound ethical culture, the details
of which are outlined in the Social, ethics and
transformation report in our Integrated Report.
Fraud and corruption
We have a “no tolerance” attitude towards
fraudulent or illegal activity within the group.
Our risk and capital committee oversees our
risk management process and regularly reviews
the updates to the risk register thereby enabling
us to monitor, manage and eliminate areas of
risk within the group and combat this through
our internal processes and procedures. Despite
there being no instances of anti-bribery and
corruption nor anti-money laundering withinEquites Property Fund Limited
Company profile 23
Community involvement around our development nodes. This
Serving our We understand that throughout our operations engagement allows for an understanding of
community we have an opportunity to positively influence the socio-economic dynamics of these
surrounding communities and we are communities and by performing a strategic
Capital mapped: committed to enriching the lives of people mapping of the available local businesses in
within these areas through self-empowerment. the built environment sector, we can identify
This commitment is structured and enforced or grow skills in the area. Resultantly, when the
through our development professional team opportunity arises, members of the local
SDGs supported: who aim to employ the services of community can readily and effectively
experienced community-based companies participate in trades created by Equites.
within the built environment sector. Where
experience is lacking in that area an In doing this we can invest in certain areas of
apprenticeship initiative provides a platform the community through job creation and
for much needed skills enhancement within effectively engage with individuals to minimise
Management approach the built environment profession. We have disruption to their lifestyle and working
Our strategy is to create a lasting impact on regular engagements with local community conditions.
society with the long-term view of sustainably businesses and individuals to establish ways
developing the skills set of people in our that they can source opportunities from Educational initiatives
country which we believe will have a positive Equites. We firmly support the view that education
contribution to our economy through self- plays a pivotal role in society and creates a
development and empowerment. As such, our A key component of our commitment to lifelong foundation for individuals to advance
drive for the year has been identifying areas empowering surrounding communities in the from. Advocating initiatives around this is one
where we can positively impact the local current year stems from our successful of our key priority areas that is managed through
communities in which we develop our sites partnership with Zibula. Equites engages Zibula our partnership with The Michel Lanfranchi
and providing education opportunities for to assess the social impact and to integrate a Foundation (NPC) (the “Foundation”). Our
individuals in our country. feasible community engagement strategy ambition and focus are on enriching the lives
of people in our country who are passionate
about what we do, by providing education to
those enrolled in property studies at the
University of Cape Town. Furthermore, we
engage in a learnership programme that
focuses on empowering previous
disadvantaged individuals by teaching them
valuable practical skills that can be applied in
the work environment thereby creating a
steppingstone into the corporate sphere.
Plans for the future
We will continue to engage with local
communities and drive initiatives towards
community upliftment and development. In
light of the recent developments of COVID-19,
we are seeking ways to contribute to the
health and wellbeing of South Africans.
Through the donation by the executives of a
third of their salaries to a charity of their
choice for three-months, it is a start to enable
those charities to reap the immediate benefit
of those funds.
Furthermore, we are continuously looking for
ways to improve the educational initiatives we
are involved in and will continue implementing
our education focus around the bursaries and
learnerships for the upcoming year.24 Equites Property Fund Limited
Company profile
Sustainability report continued
service is vital in responding to our tenant Through our development and property
Customer needs. By following a proactive approach in management teams, we validate that our
centricity our communication, we are able to property meets the requirements of the tenant,
innovatively tailor our offering and are in accordance with the development
Capitals mapped: continuously monitor their needs, thereby specifications and adhere to health and safety
creating predictability and stability in their regulations within that jurisdiction. The focus
operations. of our offering is on high-quality A-grade
tenanted logistic facilities and we believe that
SDGs supported: To do this we focus on the following areas: by looking after our tenants’ needs and our
properties, we have created a niche brand that
people can rely on. Furthermore, throughout
Determining tenant needs the process, we understand the importance of
tenant confidentiality and we safeguard their
privacy and data in all transactions we perform.
Management approach Devising innovative ways Our strategic partnerships and focused approach
With our tenants being the main pillar of our to meet their needs have meant that we are able to grow our tenant
business, we recognise the importance of base in the 2020 financial year, despite the
building long-standing relationships as our tough economic environment that faced us.
success relies on us establishing and Delivering on our promise
maintaining trust with them. As such, customer Plans for the future
centricity is at the forefront of our efforts and Continuous monitoring The focus of our efforts will be on timeously
we are continuously seeking opportunities to and identifying new addressing issues raised by our tenants, attracting
assist our tenants by walking their business improvements and retaining new high quality tenants, ensuring
journey with them through effectively compliance with strict health and safety standards,
enhancing their supply chain. We recognise Ensuring health, safety and maintaining confidentiality and data protection,
that not only is growing our portfolio and tenant confidentiality is enhancing the mechanisms through which
maintained
tenant base important, but post-occupation tenants can voice their concerns such as
surveys and promoting open communication
between Equites and our tenants.You can also read
