Following a positive set of results for the year ended 28 February 2025, Warren Douglas, Treasurer and Head of Risk, sat down to share his thoughts on what lies ahead as our strategic decision to exit the United Kingdom starts to take shape.
Although we faced a period where we were uncertain about how stakeholders would respond to our decision to refocus on our South African portfolio, we remained confident in our thinking and can now say that it is proving to be the right one. Below, Warren delves into more of what this strategy entails—and explains why we and a number of key consulted investors are feeling optimistic about it.
Shifting focus to South African soil
For context, our decision to sell off UK assets dates back to August 2023, with the broad aims of reducing our loan-to-value ratio and maximising value for shareholders in light of macroeconomic changes in that region. Having successfully disposed of five income-producing UK assets since that time, a further five of our income-producing assets in the United Kingdom are actively being marketed, as we reported in our FY25 Annual Results Presentation. We also noted that we would not be undertaking any further development activity in the United Kingdom but would instead be focusing our efforts on unlocking new logistics facilities in South Africa.
Naturally, these bold moves may prompt the question: “Why?”
In essence, it is quite simple. We believe that there is massive potential for growth locally based on several factors, including our tenants’ reported success, the viable opportunities for us to help them further accelerate their supply-chain efficiencies, along with an uptick in multi-national corporations regaining confidence in South Africa, as we see more investment decisions coming to the market.
Reflecting on tenant successes
Considering a practical example, we developed a 75 000 m2 facility with TFG in Riverfields, Johannesburg. TFG deployed a successful phased approach for its new omni-enabled distribution centre to go live with multiple TFG brands.
TFG’s results presentation for the year ended 31 March 2025 highlighted significant results achieved. The key efficiencies noted include enabling a demand-led replenishment strategy and central e-commerce operations, with both of these strategies driving higher margins for the business. TFG reported that its replenishment lead time has decreased from 4.6 to 2.6 days. The omni-channel model gives buyers real-time access to TFG’s full range, and central fulfilment enables key supply chain efficiencies like parcel consolidation and shared transport networks.
Riverfields was designed to cater for further growth and expansion supporting TFG’s growth plans, and Equites is ready to partner with TFG on their journey of growth.
Looking at another impressive use case, Shoprite recently shared that its new, world-class distribution centre—a 94 000 m2 development, also located in Riverfields—is powering the Group’s longest retail promotion, Checkers’ XXL Savings, which offers customers over R45 m in savings every day for six weeks, spanning a period in June and July.
The distribution centre is strategically located to serve over 500 supermarkets in Gauteng, with an operational capacity that allows for 220 trucks to be onsite at any time. The Group’s investment into systems and technologies within the distribution centre work in conjunction with the state-of-the-art facility that we purpose-built for efficiency—ideal for supporting a large-scale campaign like this one.
As Andrew Havinga, Chief Supply Chain Officer at the Shoprite Group, put it, “Riverfields was designed to support high-volume trading periods like the Checkers XXL promotion, even as it lays the groundwork for the company’s long-term commitment to infrastructure investment, enhanced supply chain capabilities, and job creation.”
It was reported that the introduction of the Riverfields distribution centre alone created approximately 1 700 job opportunities, with 750 of those roles filled by residents from a nearby community.
Expanding efficiencies with “logistics hubs”
With major retailers investing heavily in their supply chains and seeing the benefit thereof, they rely all the more on their suppliers to keep pace. As a result, we are expecting that suppliers to these retailers will also, if they have not yet already, start investing significantly in their own supply chains, which would, of course, ultimately benefit South African consumers and the country overall.
Against this backdrop, we believe that there will be an increased requirement by suppliers of large retailers for facilities located as close as possible to retailers’ distribution centres to optimise their logistics operations. Given our strong relationships with leading retailers in South Africa, established through our development of best-in-class assets that have optimised retailers’ supply chains, we believe that Equites is perfectly positioned to be the leading provider of these facilities in key locations around the country.
With this in mind, we have been working on a concept together with one of our existing tenants to develop smaller facilities on land adjacent to that company’s large-scale distribution centre for its main suppliers, creating a “logistics hub” of sorts. This would mean that those suppliers would only need to drive a few hundred metres to deliver to the anchor retailer, creating a more seamless, efficient supply chain.
Beyond the first launch, we aim to use this concept as a blueprint to roll out more of these hubs wherever feasible for our tenants and other large retailers, drawing on our excellent relationships.
A concept like this, especially implemented more broadly across our portfolio, would no doubt result in a collaborative setup to the benefit of all stakeholders—from the retailers and their suppliers to the end consumer, as well as our investors. Further, reduced transport requirements between suppliers and retailers would support our aim to minimise our environmental impact. Ultimately, this all ties in with our ethos to maximise efficiencies for our tenants—while prioritising sustainability—and deliver strong returns for our investors.
Building on proven results
There are several other factors that we strongly believe will contribute towards significant growth in the logistics space in South Africa. E-commerce is set to continue to expand rapidly in South Africa, with the total value of online sales expected to grow to R225 bn in 2025 (RMB Research) which will require targeted investment in supply chains. With continued population growth and urbanisation in South Africa, there will be a heightened need for efficient warehousing solutions to meet the growing demand for goods. The focus of Operation Vulindlela on logistics infrastructure throughout South Africa, especially between ports and urban conurbations, will also facilitate the rapid demand for logistics facilities.
These broader economic factors, coupled with our own investment activity and the development prospects that I have outlined in this article support our guidance of 5–7% distribution growth, as presented in our FY25 Results Presentation. With that, we remain optimistic about what lies ahead and are grateful to those who have walked the road with us, exhibiting trust in our strategy. We look forward to seeing the anticipated development opportunities materialise on South African soil and are pleased to be a part of this growth.
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