Despite the difficult economic climate South Africa is experiencing at present, Fairvest Property Holdings Limited managed to conclude some 30 lease renewals, or 6 000m² of GLA during the first four months of the new financial year at the budgeted rentals.
Chief Executive Officer, Darren Wilder says, “In tough times investors should look for a management team that have managed assets in both bull and bear markets. Fairvest‘s management team offers this experience.”
Fairvest Property Holdings Limited focuses on non-metropolitan shopping centres including convenience, community and regional shopping centres, servicing the lower LSM market, in high-growth nodes, close to commuter networks. The Fairvest property portfolio is geographically diversified across South Africa and consist of 43 properties, with 207 965m² of lettable area, which is valued at R 2.5 billion.
“We differentiate ourselves through performance and not size,” says Wilder. “In order to derisk the income stream, we have ensured that 85% of our tenant base consists of anchor and/or national tenants. Coupled to this we secure long lease periods of 36 months. We are well positioned to deliver our communicated growth.”
Major lease renewals included a 2 000m² Mr Price in Pietermaritzburg, a Large Post Office in Limpopo and a number of Pepkor brands which were all renewed. On new deals, Fairvest has filled 700m² of office space in Bellville and Midrand. Within the retail sector, a highlight was an expansion of a number of existing successful retailers into larger premises, as well as assisting Jumbo Clothing on their national expansion by letting 360m² to them in Nyanga.
Fairvest has a number of exciting redevelopments underway, which will go a long way to not only fill vacancies, but make its centres compete favourably in an increasingly competitive retail environment. These include; a three-phase redevelopment of Middestad Mall, Bloemfontein, to incorporate Medical Suites, a Food Court and Offices, an expansion of an existing centre in Bethal, Mpumalanga to enlarge a SuperSpar, and cosmetic upgrades to The Ridge in Randburg, St Georges Square in George, and Masingita Shopping Centre in Giyani, Limpopo.
“Retailers are experiencing economic strain at the moment, which feeds into some negative sentiment during lease discussions,” says Nicholas Rix, Leasing Manager at Fairvest Property Holdings Limited. “We have however continued to secure positive rental growth at lease renewal time, and contained rates of vacancy through maintaining good relationships with retailers and national leasing brokers.”
A great example of maintaining these relationships is an exciting broker incentive Fairvest Property Holdings Limited is offering to the first five leasing brokers who manages to bring leasing deals to them during November. These lucky brokers will be flown to Cape Town to attend the HSBC Sevens Rugby Series on 09 December.
Overall, Fairvest encourages a different approach on leasing. They encourage retailers to take a focussed view on a particular store, and if it trades at expectations, increased rentals are possible to negotiate. The numbers bear testament to the success of this approach in Fairvest renewing its leases at an average through rate of 7% increase at renewal. This is a great contributor to Fairvest’s pursuit of its communicated growth strategy.