Fairvest confident about distribution growth


Fairvest confident about distribution growth


Published Date: 2019-02-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Fairvest confident about distribution growth

The shopping centre owner says the lower end of the market has proved to be more resilient to the tough economy.

Fairvest continues to claim its position as the top performing SA real estate investment trust after growing its total return to shareholders by 25.7% last year.

The group focuses on retail assets outside of the main metropolitan areas and rural shopping centres servicing the lower income market and close to commuter networks and says it's one of the few remaining REITs with pure exposure to the SA market. Its portfolio consists of 45 properties worth R3.14 billion.

It says these centres have been more resilient than the balance of the retail sector, which has felt the effects of the tough economic environment. It also has low exposure to retail group Edcon, with Jet Stores taking up just 0.8% of its total gross lettable area.

Revenue increased by 28% to R239.4 million in the six months to end-December, helped by acquisitions made during the period. It bought the Libode Shopping Centre in the Eastern Cape for R49 million during the period. Net profit from property operations rose 29% to R155.3 million and distributable earnings improved by 26.5% to R106.8 million. Its net asset value rose 3.8% to R2.34 billion, equating to 232.98c per share.

It grew gross rentals across its portfolio by 6.3% due to a big increase in rentals on new leases, offset by a 0.5% negative reversion on renewals. It renewed three large national leases during the period resulting in the negative reversions but said they were in line with its expectations and budgets.

It's lifted its interim distribution by 8.3% to 10.616c and expects distribution growth of between 8% and 10% for the full year.

Its shares closed 2.7% higher at R2.26 yesterday.


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