Fairvest dividend up 10% for fourth year
Assuming no material deterioration in the macroeconomic environment, the company expects distribution growth of 9%-10% next year
Fairvest Property Holdings is rewarding investors who favour consistent income returns.
The company, which has a market capitalisation of R1.58bn and invests in retail assets weighted towards rural and community shopping centres servicing the lower living standards measure market, had a dividends increase of 10.04% year on year.
This exceeded market guidance and culminated in distribution growth of more than 10% for the fourth year running.
Fairvest declared a dividend of 18.333c a share.
The group’s consistent performance has been recognised by investors. Fairvest was the top-performing real estate investment trust (Reit) for the year to June 30 with a 38.5% annualised return. It is among the leading Reits in terms of performance over a three-and five-year period.
“The resilience of the Fairvest portfolio is particularly evident in these tough conditions and this, together with our strong focus on delivering on value extraction and key operational metrics, have paved the way for a continued creditable performance and sustained value creation,” said CEO Darren Wilder.
Fairvest’s like-for-like annualised property income rose 9.3%. Its net asset value rose 8.2% to 218.18c per share. Its total property portfolio value rose 14.5% to R2.2bn. The company also raised R224.5m worth of new equity.
Fairvest’s vacancies were low at 4.7% of its total lettable area. It is geared at 22.4% loan-to-value, which provided ample scope for expansion. The average size of a Fairvest centre is 5,000m² and anchor tenants tend to include a Shoprite, Boxer, Spar or Pick n Pay store.
The company should be able to achieve distribution growth of between 9% and 10% for the 2018 financial year, Wilder said.
Sesfikile Capital director Mohamed Kalla said Fairvest was one of the company’s top property picks for 2017 as it was a pure South African retail property play with no complex structures or offshore interests.
“The relatively small size means that management has a deep understanding of every asset,” he said.