Fairvest unable to forecast dividend

Fairvest, the owner of retail centres in rural areas and small towns, says the effects of the Covid-19 pandemic and resultant lockdown have made it impossible to forecast a dividend.

Fairvest, the owner of retail centres in rural areas and small towns, says the effects of the Covid-19 pandemic and lockdown have made it impossible to forecast a dividend.

It on Wednesday withdrew its guidance of distribution per share growth of between 4% and 6% for its year to end-June.

Fairvest was among the topperforming property stocks in 2019 and 2020. In March it said it achieved dividend growth of 5.1% in the six months to December 2019, net property income growth of 2.2% and a five-year low in its portfolio’s vacancy rate.

BALANCE SHEET

But CEO Darren Wilder said Covid-19 has created uncertainty, even for a company like Fairvest, which had a healthy balance sheet. “We have not given market guidance as yet,” he said.

The company will update the market over time.

The property group said it has no debt facilities maturing for the remainder of its financial year and had approximately R105m in undrawn debt facilities as of May 5.

“Fairvest remains well within all its debt covenants,” the group said. “Fairvest continues to actively engage with all our tenants on the impact of Covid19 on their businesses to find sustainable solutions for these unprecedented times, taking into consideration guidelines and recommendations provided by the Property Industry Group for retail tenants.”

The share price had increased 3.08% to R1.34 by the close on Wednesday, giving the group a market capitalisation of about R1.36bn.

The group had 44 properties valued at R3.49bn as of the end of December.

Wilder said earlier this year that SA’s weak economy had led to a scarcity of new capital and limited opportunities for new growth, but the company said its full-year distribution should beat inflation in 2020.

5.1% Fairvest’s dividend growth in the six months to December 2019

DEFENSIVENESS

“Fairvest’s focus on a differentiated sector of the market and its persistent drive to get the property basics right have again demonstrated the defensiveness of its portfolio amid market conditions that have proven extremely challenging,” he said.

R3.49bn the value of the retail landlord’s 44 properties as of the end of December