JSE-listed property group Fairvest has reported a yearly distribution of 142.57c per A share and 48.15c per B share for the financial year ended September 30, surpassing the guidance provided to the market.

The company noted a reduction in vacancies to 4.1% from 4.3% in the prior financial year and boasted like-for-like net property income growth of 5.8%. Positive rental reversions improved from 3.6% to 4.8%.

The company said it experienced positive letting activity, concluding 537 new deals and 504 renewals during the year, achieving an overall tenant retention rate of 83%.

Average gross rent increased by 5.2% to R134.18/m².

The weighted-average lease escalation across the portfolio held steady at 6.7%, while the weighted-average lease term extended to 30.1 months.

The company said the group continued to invest in its property portfolio during the reporting period, with total capital expenditure of R288.9-million, including R33.8-million for further solar initiatives.

Fairvest described its property expenses as “exceptionally well-managed”, with increases limited to 2.6%, despite being primarily driven by above-inflation municipal cost increases.

Fairvest received a dividend of R123.3-million for the year from its 23.6% stake in Dipula Properties.

“These results demonstrate the disciplined execution of a clear strategy coupled with a strong operating platform that will continue to deliver future growth,” said CEO Darren Wilder in a media release.

PORTFOLIO ADJUSTMENTS

Fairvest acquired seven retail properties, valued at R1.15-billion, during the year.

This includes Thembalethu Square, Shoprite Manguzi, Ulundi Shopping Centre and Nquthu Shopping Centre that have transferred, while Eyethu Junction, Jozini Mall and Tugela Ferry Mall are expected to transfer in the new financial year.

Additionally, three disposals of industrial and office assets valued at R99-million were also concluded.

The company said two have transferred and one is expected to transfer in January 2026.

Fairvest noted that these transactions are well aligned with its strategy to create a retail-only fund focused on non-metropolitan retail assets situated near commuter nodes and transport interchanges, with strong national anchors that cater to previously underserviced markets throughout South Africa.

The company said it aims to achieve this by improving the quality, and recycling, of noncore assets.

Retail assets already represent close to 71% of Fairvest’s revenue and value, with offices and industrial assets comprising the remainder.

“We're operationally strong. The business has delivered a great set of results, we will continue to grow our business,” said Wilder during the financial results presentation on December 1.

TOWNSHIP FIBRE INFRASTRUCTURE

Meanwhile, Fairvest noted that it had invested R477-million in a subsidiary, Onepath Investments, which acquired de-risked fibre infrastructure in townships.

Fairvest explained that this infrastructure was leased to a fibre network operator to supply high-quality Internet to township homes and communities.

As at September 30, Fairvest held a 79.9% interest in Onepath Investments.

The company said digital inclusion for underserviced communities opened up opportunities in education, employment, entrepreneurship and entertainment, helping these communities thrive.

It expressed that this not only strengthened Fairvest’s core retail market but also gave the company access to data, insights and new retail opportunities within its existing portfolio.

The rental income also provides an attractive, accretive dividend yield for Fairvest, exceeding 12% of invested capital.

“By providing affordable digital access and data solutions, we really help improve education, employment and entrepreneurship. Ultimately, we are strengthening those very communities that support our retail portfolio.

“Fairvest will continue to position itself as a leader in the Reit space by integrating digital infrastructure assets with traditional retail properties,” said Wilder.

IMPROVED DEBT METRICS

At year-end, the group had loans amounting to R3.9-billion, with an average maturity of 2.5 years.

After deducting cash and cash equivalents, the loan-to-value (LTV) ratio was 25.6%, down from 33.3% last year.

Fairview said this LTV ratio remained comfortably below the group and portfolio LTV covenant limit of 50% for its facilities, with an interest cover ratio of 3.1 times, which is significantly above the two times coverage required by its funders.

The weighted average interest rate for the year declined to 9.05%.

As of September, Fairvest had about R1.3-billion in cash and available undrawn debt facilities for growth initiatives.

The group has interest rate swaps of R3.7-billion, with 93.6% of its debt hedged. These swaps have a weighted average maturity of 1.1 years.

ENVIRONMENTAL

Meanwhile, Fairvest noted that the group had made significant progress in its integrated backup power strategy to ensure business continuity during adverse conditions.

It explained that, currently, about 47% of the portfolio’s gross lettable area had access to either partial or complete backup power.

A further R33.8-million was invested in renewable energy this year, with 52 solar plants now fully operational, and a total installed capacity of 23.3 MW.

The company said these plants generated clean, renewable energy valued at R60.3-million, meeting about 14.3% of the combined portfolio’s electricity needs during the period.

An additional ten plants with a capacity of 2.7 MW are at various stages of feasibility assessment, approval and implementation.

Ten fuel saver systems have been installed, integrating solar plants with generators to reduce diesel consumption and increase renewable-energy use during power outages.

Additionally, a series of water management and conservation projects is underway, including 24 operational groundwater harvesting plants and the strategic deployment of smart monitoring devices across 36 properties to facilitate early leak detection.

OUTLOOK

Fairvest expressed that the group had started its 2026 financial year in a strong position, supported by solid performance and strategy execution.

The company said portfolio fundamentals are stable with low vacancies, better tenant quality and strong like-for-like net property income growth across sectors.

Improvements in the national electricity grid, easing inflation and moderating interest rates have boosted operating conditions.

However, ongoing municipal service issues and the broader macroeconomic environment remain risks.

“The portfolio remains resilient and positioned for growth. We continue to transition towards retail, with a commitment to entering acquisitions and disposals only at the right price,” the company said in a media release.

Fairvest noted that the board had resolved to declare a final dividend of 72.92c per A share and 25.04c per B share, being 100% of the distributable income for the period.

Distributable earnings per B share are expected to rise by between 9% and 11% in 2026, with A share dividends growing by the lesser of 5% or Consumer Price Index, in line with the memorandum of incorporation.

The board will keep the dividend payout ratio at 100%, subject to bi-annual review.

Wilder noted that the company’s LTV was expected to remain below 35%, highlighting the importance of maintaining a conservative balance sheet as the company experienced a growth phase.