Fairvest increases distribution on solid letting and cost containment

Fairvest owns shopping centres near taxi ranks and in rural areas.

Fairvest grows distribution 10.29% for the year to June on strong letting and careful cost management.

The retail-focused property company’s share price closed 6.25% higher, at R1.70, following the news. The company’s tenant retention increased from 81% to 85.2%, while its property portfolio value grew 41.4% to R1.912bn.

“We have spent much of our time renewing leases and containing costs. I think that has enabled us to beat the 8%-8.5% distribution growth which the market expected,” Wilder said.

Fairvest would continue to be an income-focused, specialised retail property company, he said.

Fairvest owns shopping centres near taxi ranks and in rural areas. “We set out four years ago to be a specialised retail property fund which would deliver market-beating distribution growth and that is what we are doing,” Chief Executive Officer, Darren Wilder said.

Grindrod’s chief investment officer, Ian Anderson, said Fairvest had performed well over the reporting period. His team had been investing in it for while.

“This is one of our preferred holdings in the listed property sector at the moment, and has been for a number of years now.

“Despite producing double- digit growth in like-for-like net property income and distributions for the second year in a row, the only real estate investment trust (Reit) in SA that can lay claim to that distinction, it continues to trade on an extremely attractive clean forward yield of 12% and a discount to net asset value of more than 20%,” Anderson said.

Fairvest was expecting distribution growth of between 9% and 10% in financial year 2017.

Fairvest was able to reduce vacancies to 3.8% of the total lettable area, and achieved 11.6% growth on rental renewals.

Maurice Shapiro of Ma’alot Investments said Fairvest understood its target market. Its shopping centres were strong- performing assets.

“This is a company with good property metrics and a strong management team, making a compelling case for smaller investors. Strong results from Hyprop Investments and Fairvest have shown that retail is the sector of property to play in,” he said.