‘Resilient’ Fairvest adds acquisitions, lifts income
DURBAN - Fairvest Property Holdings said it made more acquisitions and increased its income to remain resilient in the year to end June despite the threat posed by the Covid-19 outbreak.
The property investment holding company and real estate investment trust said that it bought Nonkqubela Mall for R162.8million and Qumbu Plaza for R54m during the reporting period.
It said it also provided gross rental deferrals of April, May and June billings to certain small, medium and micro enterprise (SMME) tenants, with repayment terms ranging from 3 to 36 months, commencing from July 1.
“Of the gross billings in April to June, credits of 10.5percent of total gross billings were conceded for 364 tenants and deferrals were provided on 10.8percent of total gross billings for 216 tenants. After taking into account the concessions provided, approximately 95.8percent of collectable billings were collected for these periods,” the group said.
Fairvest focuses on retail assets in non-metropolitan and rural shopping centres and consists of 44 properties valued at R3.49billion.
The group reported an 8.7percent increase in total property revenue to R532.1million for the year to end June, due to an increase of income in the historic portfolio and acquisitions despite providing concessions in the form of gross rental deferrals and rental credits to tenants.
It said net profit from property operations increased 4.6percent to R330.1m while distributable earnings decreased 5.6percent to R208m and gross cost to income ratio rose to 38.9percent from 36.7percent due to the rental concessions provided to tenants, as well as a significant increase in the provision for expected credit losses on rental billed during the Covid-19 lockdown period.
Chief executive Darren Wilder said the property portfolio proved resilient in an exceptionally tough environment.
“Fairvest’s continued satisfactory financial performance is attributable to its focus on a differentiated sector of the market. There is a perceptible shift in consumer preference towards convenience and neighbourhood shopping and this is borne out by trading density growth in the local market, which has favoured smaller retail formats,” Wilder said.
The group’s tenant retention remained high at 73.2percent and arrears low at 4.4percent of revenue.
However, distribution for the year decreased 3.4percent to 21.04 cents a share. The group declared a final gross dividend of 9.88c.
Looking ahead, Fairvest said it would continue to monitor the long-term impact of the pandemic on the economy and on its operations.
“Fairvest is well-positioned The balance sheet remains conservative, with R132.8m of undrawn debt facilities available to consider opportunistic yield accretive acquisitions,” the group said.
Fairvest rose 10percent on the JSE on Wednesday to close at R1.65.