Fairvest happy to be defensive
Fairvest Property Holdings says its strategy of investing in mainly grocery-anchored assets will stand it in good stead in its new financial year, which it expects will be characterised by low economic growth and high unemployment. Fairvest owns shopping centres in non-metropolitan areas and which cater mainly for low-income consumers.
Fairvest Property Holdings says its strategy of investing in mainly grocery-anchored assets will stand it in good stead in its new financial year, which it expects will be characterised by low economic growth and high unemployment.
Fairvest owns shopping centres in non-metropolitan areas and which cater mainly for lowincome consumers, who are more likely to cut discretionary spending in favour of essential items in tough economic times.
“The global macro outlook remains uncertain. Together with uncertainty around the lasting impact of the Covid-19 pandemic on the SA economy and coupled with record local unemployment, this is likely to result in muted economic growth in the short to medium term,” CEO Darren Wilder said on Monday.
“Fairvest, however, remains well positioned with a focused strategy of mainly investing in grocery-anchored assets servicing non-metropolitan and lower LSM [living standard measure] markets. These assets proved more resilient during the Covid-19 pandemic with the recovery being quicker than anticipated, without significant increases in vacancies.”
While the pandemic has struck a blow to larger brickand-mortar malls in overtraded metropolitan areas over the past 18 months, convenience shopping centres in largely underserved towns and rural villages appear to have weathered the Covid-19 restrictions better.
In June, before the unrest and looting that gripped parts of KwaZulu-Natal and Gauteng, Vukile Property Fund said the foot count at its malls was trending towards pre-Covid-19 levels, with the rural portfolio
and township shopping centres leading the recovery.
Wilder said Fairvest was able help its tenants navigate through government trading restrictions.
“In many cases we granted both rental credits and deferrals which enabled many businesses to remain trading. That contributed to lower vacancies and arrears as compared to the prior year,” he said.
Vacancies dropped to 4.5% in the year to June from 3.7% a year earlier, while the value of its property portfolio rose 4% to R3.44bn. A final dividend of 11c per share was declared, taking the total to 22.063c, up 5% on the prior comparable period.
Updating investors on the looting that took place in July after its year end, Fairvest said most of its 12 affected properties have reopened for business while seven tenants cancelled lease agreements.
The extent of damage to the properties was largely limited to shop fronts, roller shutter doors, fixtures and fittings. Two properties in the portfolio, Richmond Shopping Centre and Bara Precinct, had partial fire damage that affected a small percentage of their gross lettable area.
Wilder said Fairvest would “very shortly” release details of its proposal to acquire a majority stake in peer group Arrowhead Properties in a share-swap deal.
At last week’s general meeting, the majority of Fairvest shareholders voted in favour of the resolutions relating to the share-swap transaction with Arrowhead. The transaction remains subject to conditions precedent, including competition commission approval.
THESE ASSETS PROVED MORE RESILIENT … WITH THE RECOVERY BEING QUICKER THAN ANTICIPATED
Darren Wilder Fairvest CEO