Fairvest on Friday said that it beat its guidance after reporting an annual distribution of 138.34 cents per A share and 43.29 cents per B share for the year to September 30.
Fairvest has a strategy to grow by acquisition towards becoming a retail-only Real Estate Investment Trust (REIT) of market-appropriate size, and so it recently issued about R1 billion in equity to acquire an additional investment in Dipula, increasing its stake to 26.3% from 5%..
Fairvest is the largest exclusively South African-focused property fund, with a portfolio worth R12.3bn comprising 128 properties—72 retail, 29 office, and 27 industrial properties.
“Fairvest has made pleasing headway in restructuring its portfolio in the past three years towards becoming a retail-only REIT servicing low-income communities in South Africa by disposing of non-core assets and reinvesting in retail-focused properties,” said CEO Darren Wilder.
The REIT has forecast distributable earnings per B share for the new financial year to be between 45 cents and 46 cents a share, an increase of between 4% and 6.3% for the 2025 financial year.
Distributions per A share were forecast to increase by the lesser of 5% or the most recent Consumer Price Index.
Wilder said shareholder value had been protected, with R1.3bn of disposals concluded at a premium to book value and an average yield of 8.1%.
“By focusing on property fundamentals, the fund has delivered consistent performance and strong shareholder returns since the merger,” he said.
Fairvest vacancies were at 4.3%, while like-for-like net property income growth was 7.2%.
Fairvest experienced positive letting activity, with 531 new deals and 476 renewals concluded. Vacancies have decreased from 4.5% to 4.3%.
Six disposals valued at R280.3 million were finalised during the year at an average yield of 1.2% and a 0.4% discount to book value. The majority comprised three office properties, which, combined, had a vacancy of more than 25%.
Over the past two decades, Dipula has reduced its exposure to the office sector while increasing its focus on retail, all the while building strong internal management capabilities. Its stated objective has been to scale up and expand its retail portfolio.
“We look forward to exploring creative ways to unlock value on a collaborative basis,” said Dipula CEO Izak Peterson about Fairvest increasing its stake in Dipula.
“Our portfolios are of similar size and sector exposure, and we share a similar outlook on the real estate sector and black economic empowerment.”
At year-end, Fairvest had loans amounting to R4.2bn. After accounting for cash, the loan-to-value (LTV) ratio was 33.3%, unchanged from the previous year. This LTV ratio is comfortably below the group and portfolio LTV covenant limit of 50%.
Around 46% of the portfolio’s gross lettable area has access to backup power.
During the year, the number of solar plants increased from 38 to 42, resulting in a total installed capacity of 20.3MWp. A further 12 plants are undergoing feasibility assessments, which would add an additional 4.3MWp of capacity.
A range of water management and water savings projects are underway, including 21 groundwater harvesting plants in operation and the strategic installation of 26 smart monitoring devices to enable early leak detection.
BUSINESS REPORT