Oversubscribed bookbuild could ignite property funds’ confidence in raising capital directly from the market
Equites Property Fund, the only specialised industrial real- estate owner listed on the JSE, has raised about R710m in capital, cementing the market’s confidence in the stock.
The money was raised through an accelerated bookbuild which was strongly oversubscribed as Equites had initially wanted to raise R500m. Analysts said this successful bookbuild could signal that more capital raises will take place this year in the listed property sector.
Stanlib’s head of listed property funds Keillen Ndlovu said Equites owned logistics assets and distribution warehouses, which had performed well in SA and the UK.
“It makes sense that investors wanted to be part of Equites’ bookbuild. They are a well-run company operating in a very hot sector. Any fund which owns high quality logistics like Equites is set to attract capital in SA,” he said.
Logistics assets were being supported by growing online retail sales globally, Ndlovu said.
Equites has expanded its assets from R1bn at listing in June 2014 to more than R10bn. The company achieved an annualised total return of 24.8% each year, according to Ndlovu.
“They have delivered double digit dividend growth and have been successful in SA and the UK,” he said.
Equites’ CEO Andrea Taverna-Turisan said the capital raised through the bookbuild would be placed into the fund’s facilities, helping to ease its loan-to-value (LTV) position. It could then be used for future acquisitions.
Nesi Chetty, head of listed property at MMI Investments, said activity was returning to the listed property sector.
“I think this is the start of more bookbuilds for our sector. I’d expect logistics asset owners as well as owners of offshore property to go to market, but also some diversified funds will look to raise capital this year,” he said.
Ndlovu said that in 2018 only R6bn had been raised by listed property funds, while a total of R40bn had been secured in 2017.
However, today Hyprop Investments slumped 5.63% to R83.40. Earlier, it said Moody’s had lowered its investment grade to junk status, citing debt-funded acquisitions in Eastern Europe that had increased its debt-to-asset ratio to 41% as of June 2018.