Fairvest to acquire 5 retail assets, increases stake in Dipula Properties
Fairvest Limited is acquiring five retail assets in KwaZulu-Natal and the Western Cape for R477.7 million with a blended yield of 9.81%.
The Company has concluded agreements to acquire Nquthu Shopping Centre, Ulundi Shopping Centre and Eyethu Junction from Collins Property Group for a total purchase consideration of R208.7 million as well as Shoprite Manguzi for R136 million (subject to conditions precedent). In addition, Fairvest has also entered into an agreement to acquire Thembalethu Square just outside of George. The new retail assets will add 34 118m2 of gross lettable area (GLA) to its retail portfolio.
“Fairvest is making consistent progress in transforming its diverse portfolio by improving the quality while pursuing its aim of becoming a retail-only REIT servicing low-income communities in South Africa. This is achieved by disposing of non-core assets and reinvesting in retail-focused properties. Approximately 70% of revenue is already generated from retail properties,” says CEO of Fairvest, Darren Wilder.
The REIT owns and manages a direct property portfolio comprising 127 retail, office, and industrial assets valued at R12.5 billion with an average property value of R98.1 million.
Fairvest concluded 236 new deals and 216 renewals during the six months ended 31st March 2025 with the new deal weighted average lease expiry (WALE) having increased from 36.7 months at yearend to 47.3 months. Positive rental reversions continued to improve from 3.6% to 4.3% with average gross rentals having increased by 2.5% to R130.69 per m2 since yearend. The Company’s weighted average lease expiry increased from 28.6 to 31 months while vacancies edged up from 4.3% to 5.5% with a tenant retention of 81.3%.
Fairvest reported an 8% increase in property expenses linked to higher municipal costs. Excluding this, operating expenses decreased by 1.9%.
The Company disposed of one industrial asset valued at R24 million during the period. The transaction was concluded at an average yield of 9 % and a 14.3% premium to book value, incurring capital expenditure of R139 million, of which R19.8 million relates to further investments in solar initiatives. Fairvest also invested R76.6 million in fibre network infrastructure, which earns rental income.
During the reporting period, Fairvest increased its holdings in Dipula Properties from 5% to 26.3%.
The REIT’s net loans of R4.4 billion represent an SA REIT loan-to-value (LTV) ratio of 31.8%, a 150-basis points reduction since yearend (September 2024: 33.3%). As at 31st of March 2025, Fairvest had cash on hand and undrawn debt facilities of R547.4 million.
For the six months to 31st March 2025, Fairvest reported 8.8% growth in its interim distribution per B share to 23.10 cents, outpacing CPI, with an interim distribution of 69.66 cents per A share. Its Board expects distributable earnings per B share to increase by between 8% and 10% for FY2025 with the distribution per A share to increase by the lesser of 5% or the most recent CPI value.
