JSE-listed specialist logistics real estate investment trust Equites, through its subsidiary Retail Logistics Fund (RLF), will buy the 65 619 m² Canelands logistics campus, in KwaZulu-Natal, from retail group Shoprite for R638-million and extend the facility by a further 37 452 m². RLF will let the campus to Shoprite.

"Equites' strategy is to pursue growth in South Africa through high-quality acquisitions and developments, and the transaction meets Equites' strategic objectives," the company says.

The existing campus with the extension will total 103 071 m², and will be a world-class, secure and integrated logistics campus that meets Shoprite's specifications and operational requirements, Equites says.

The facility will be let to Shoprite on a 20-year lease, with a right to renew for three additional ten-year periods, which substantially increases the weighted average lease expiry period of the portfolio. The Development Lease Agreement will be a fully repairing and insuring lease, Equites adds.

The transaction increases Equites' exposure to Africa's largest food retailer Shoprite and thereby enhances the defensiveness of its tenant base, the company says.

Equites' objectives also include increasing its exposure to the logistics sector in South Africa, which continues to outperform, as well as creating further scale in its high-quality logistics portfolio with stable and predictable rental growth profiles, which enhances capital and income growth in the medium to long term.

The transaction also supports Equites' commitment to sustainability, as the extension will be designed in line with Excellence in Design for Greater Efficiencies Green Building Certification requirements and the long-dated, annuity income stream presents opportunities to reduce Equites' cost of debt funding over time, thereby enhancing returns to shareholders, it highlights.

Equites will serve as the development manager to implement the extension of the logistics facility.

"The campus will be a state-of-the-art distribution facility supporting various functions of Shoprite's supply chain," the company says.