Fairvest Limited has posted its results for the year ended 30th September 2024, maintaining a 100% payout ratio of distributable earnings as a dividend – an annual distribution of 138.34 cents per A share and 43.29 cents per B share, ahead of its guidance issued to the market.
“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. Significantly, shareholder value has been protected throughout the process, with the R1.3 billion of disposals to date 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. We are proud of this track record,” said CEO, Darren Wilder.
With a portfolio of 128 retail, office, and industrial assets valued at R12.3 billion (held directly through subsidiaries), the Group’s vacancies reduced to 4.3% during the period, achieving like-for-like property income growth of 7.2% and positive rental reversions of 3.6%. Average gross rentals increased by 7.8% to R127.52 per square metre (2023: R118.27). The weighted average lease escalation across the portfolio recorded 6.6% with a weighted average lease expiry (WALE) of 28.6 months.
Fairvest concluded 531 new deals and 476 renewals during the year with an aggregate tenant retention rate of 85.7%. The Group reported capex of R274.3 million spent, a 44.1% increase on the prior year.
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. Most of the disposals comprised office assets which had a vacancy of more than 25%.
In line with the Group’s strategy to become a retail-only REIT, Fairvest increased its shareholding in Dipula Income Fund from 5% as at 30 September 2023 to 26.3%, becoming its largest shareholder. A shareholder in Dipula since 2014, Fairvest has issued approximately R1 billion in equity to acquire the additional investment. Dipula has significantly reduced its exposure to the office sector while also increasing its focus on retail.
“Fairvest’s further acquisition of shares in Dipula is a testament to the success we’ve had in growing the company. We look forward to exploring creative ways to unlock value together on a collaborative basis. Our portfolios are of similar size and sector exposure, and we share a similar outlook on the real estate sector and black economic empowerment,” commented Dipula CEO, Izak Petersen.
At yearend, the Group had loans amounting to R4.2 billion. After accounting for cash, and cash equivalents, its loan-to-value (LTV) ratio remained unchanged at 33.3%.
The weighted average interest rate for the year decreased to 9.70% from 9.74% in September 2023 with the weighted average maturity 1.6 years. As of 30th September 2024, Fairvest had cash on hand and undrawn debt facilities of approximately R419.1 million. The Group has interest rate swaps amounting to R2.9 billion which hedge 68.6% of its debt. These interest rate swaps have a weighted average maturity of 1.2 years.
