Picture: THINKSTOCK
Picture: THINKSTOCK

Fairvest, which owns shopping centres in smaller towns and rural areas, has delivered inflation-beating dividend growth for the sixth year in a row.

The real estate investment trust on Tuesday reported a 9.91% increase in dividend growth, also meeting its guidance for the sixth year in a row.

The group declared a dividend of 20.15c and boosted its property portfolio size by 35.5% to R2.99bn.

Since joining at the end of 2012, CEO Darren Wilder has managed to turn around the fortunes of Fairvest, which had struggled previously to reward shareholders.

Stanlib’s head of listed property funds, Keillen Ndlovu, said prior to Wilder and his team restructuring Fairvest in 2013, the company had not invested in institutional-grade properties. This had made it difficult for management to deliver market-related returns for investors.

Fairvest achieved a total return of 12.81% in the first seven months of this year, making it the fourth-best performing property company among the more than 50 counters tracked by Catalyst Fund Managers over that period.

'Sector-beating growth'

"Fairvest continues to deliver sector-beating growth in distributions, while advancing the portfolio and improving the quality of the underlying properties at the same time. Annualised like-for-like net property income growth of 11.7% points to the quality of earnings, as well as healthy escalations in our portfolio," said Wilder.

Ndlovu said that Wilder had turned Fairvest into a reliable dividend payer and a company that benefited from having a simple structure compared with other counters which invested in multiple countries.

Wilder became CEO in December 2012 after he was involved in the recapitalisation of Fairvest at 120c a share.

Under Wilder’s management, the company has been one of the most reliable dividend payers in the real estate sector, regularly outpacing inflation, said Ndlovu.

"Fairvest delivered great results and outlook backed by a strong retail portfolio focusing on lower-income markets. This is in line with the trend we are seeing. Rural or non-metropolitan retail is trading better than metropolitan, urban and bigger shopping centres," he said.

An analyst at Catalyst Fund Managers, Paul Duncan, said Fairvest had gained a reputation for pleasing investors.

The results were very good, "coupled with a very good outlook, especially considering the tough property environment. What is assisting their positive prospects is that they are operating in a niche sector."

andersona@businesslive.co.za

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