Fairvest and Arrowhead are leaning to each other in tough property market
CAPE TOWN - FAIRVEST Property Holdings (Fairvest) yesterday expressed interest in acquiring a stake in Arrowhead Properties via privately placed share swops paving the way for greater co-operation between the two SA-focused real estate investment trusts.
This decision followed a number of separate approaches from major Arrowhead shareholders requesting Fairvest to consider becoming a shareholder of reference in Arrowhead, a statement said yesterday.
Arrowhead “B” shares increased 4.44 percent to R3.29 on the JSE yesterday afternoon after the announcement was made, while Fairvest shares were lower by 0.53 percent to R1.87 at the same time. Arrowhead “A” shares were unchanged at R9.76.
Fairvest has, according to its website, a portfolio of 43 commercial properties, including shopping centres, valued at about R3 billion. Arrowhead is the landlord of some R11 billion of retail, office and industrial tenanted properties.
Fairvest non-executive chairperson Jacques du Toit said: “Following a careful evaluation of the opportunity to acquire a stake in Arrowhead at the behest of its major shareholders, we believe there is a compelling opportunity to unlock value for the shareholders of Fairvest and Arrowhead.”
Fairvest believed both sets of shareholders, some holding stakes in both companies, would benefit from opportunities of a combined portfolio, through access to a larger balance sheet, active asset management, further portfolio rationalisation, operational costs efficiencies and a refocused strategy.
He said the initiative could be a first step in creating a platform for a broader range of investors to access a well-rated Reit of scale.
The listed property sector has been severely impacted by the Covid-19 pandemic, and distributions to shareholders and share prices have fallen significantly.
Fairvest, however, had continued to be a leading performing property stock on the South African market and –in the latest report by the SA Reit Association Fairvest was featured as a top-performer over 1, 3 and 5 years.
Fairvest chief executive Darren Wilder said: “Fairvest is experienced in managing a geographically dispersed portfolio of assets and has delivered consistent distributions to shareholders.”
He said the share swops were an exciting opportunity to lead a renewed focus on strategy and efficiencies within Arrowhead, in order to unlock sustainable value for shareholders.
“We look forward to working with Arrowhead to determine how we may apply our know-how and approach to a much larger portfolio with significant financial strength, and to create what we believe could over time become a compelling investment proposition,” he said.
At this stage, Fairvest was not making a general offer to Arrowhead shareholders or any offer of Fairvest shares to the public and the outcome of engagements with Arrowhead shareholders and Arrowhead would impact on how Fairvest would proceed in the future.