JSE-listed real estate investment trust Fairvest announced solid results for the six months ended December 31, 2017, with interim distributions having increased by 9.53% year-on-year to 9.81c a share.
Revenue increased by 15.2% year-on-year to R186.9-million.
“We attribute this to income growth in the historic portfolio as well as acquisitions. Gross rentals across the portfolio trended upwards, with a 6.2% increase in the weighted average rental and a weighted average contractual escalation of 7.5%,” CEO Darren Wilder told Engineering News Online on Thursday.
He noted that Fairvest raised R138.4-million of new equity during the period, which, together with existing debt facilities, was used to acquire properties to the value of R494.9-million.
These include Shoprite Empangeni, in KwaZulu-Natal, and a 50.17% stake in Bara Precinct, in Soweto, Gauteng, anchored by Cambridge Food and Pick n Pay.
The company also entered into a strategic relationship with Abland to develop South View Shopping Centre, in Soshanguve, Gauteng, anchored by Shoprite.
“The shopping centre is expected to open its doors in June. R28.8-million was spent on capital enhancement projects at St George’s Square – [which has been] renamed Paddagat – as well as at the Middestad Mall and Macassar Shoprite, which has attracted new tenants and has resulted in improved letting,” he said.
The total property portfolio increased by 27.1% from R2.20-billion as at June 30, 2017, to R2.80-billion as at December 31. The historic portfolio grew by 4% over the same period.
Asset quality continued to improve, with the average value per property increasing by 21.1% to R65.1-million, and the average value per square meter increasing by 7.7% to R12 223/m².
“The Fairvest portfolio’s ability to achieve robust results despite tough operating conditions has been particularly evident during this prolonged economic downturn. Our determination to keep the business uncomplicated, while focussing on the basics, maintaining strong property fundamentals and maximising value extraction, have enabled us to continue to successfully deliver quality performance over a number of years,” he said.
During the period under review, 62 new leases were concluded with a total gross letting area of 6 996 m².
Fairvest successfully renewed 15 842 m² of leases with a positive reversion achieved of 6.1%.
Vacancies decreased from 4.7% to 3.2% or to 7 245 m² during the period, owing to increased letting at Middestad Mall, Richmond Shopping Centre and Clubview Corner.