Fairvest ready for the turn in the property cycle

Fairvest CEO Darren Wilder. Photo: Supplied

Fairvest CEO Darren Wilder. Photo: Supplied

Published Nov 30, 2023


Fairvest Property Holdings had delivered growth for investors in a period of market turmoil since 2018, and low gearing and a strong balance sheet put it in a good position to grow when the property market turned, CEO Darren Wilder said yesterday.

The group forecast distributable income per share (Dips) for its “B” shares to increase to between 41.50 cents and 42.50c for the 2024 financial year. In the past year to September 30, Dips was 41.29c, and a year before it 43.2c.

For its “A” shares, Dips was forecast to increase by the lesser of 5%, or the most recent consumer price index, compared with 132.53c for 2023, and 126.22c for the 2022 year.

He said gearing by year-end was 33.3%, well down from 38.1% last year and one of the lowest in the local industry. There was cash and facilities of about R1 billion. Further non-core asset disposals were likely to reduce gearing further, Wilder said in a telephone interview.

He said they had guided for 1% to 3% distribution growth in the new financial year, which was a strong figure considering the property market was likely at the bottom of its cycle, and that many other REITS were reporting negative growth. He said that in 15 years, Fairvest had never not missed it guidance targets.

“Fairvest has made excellent progress to de-risk its balance sheet, reduce vacancies and dispose of non-core assets,” he said. Vacancies in the retail portfolio were below 4%.

He said R1bn of non-core assets had been disposed of, some R370 million was disposed of in the past year and properties worth about R275m were held for sale. The strategy was to pivot out of office and industrial into becoming focused on retail assets in previously disadvantaged communities.

He said Fairvest experienced positive letting activity and a strong performance from the portfolio. Vacancies fell from 5.9% in the prior year to 4.5% at September 30, with an aggregate retention of 86.5%. Expenses were held at only 1% growth, despite most expense items increasing in line with inflation.

SA Corporate Real Estate acquired all the shares of residential company Indluplace at R3.40 per share, or R651.4m, for Fairvest’s shareholding, in line with strategy to become a retail-focused fund.

Bara Mall, Soweto. Fairvest says it has made good progress with its back-up power strategy, aimed at maintaining business continuity. Photo: Supplied

The group made good progress with its back-up power strategy, aimed at maintaining business continuity. The group has 38 solar plants with 16.4MWp of installed capacity, which produced 10.1% of the portfolio’s electricity requirement for the year. A further 12 plants were being implemented which would add 7.5MWp capacity. In combination with 58 generators with 14.2MVA capacity, 45% of the portfolio now had access to partial or full back-up power.