JSE-listed real estate investment trust Fairvest has reported a 5% year-on-year increase in its distributable income to R707-million for the financial year ended September 30, compared with distributable income of R673-million in the prior year.

Net property income of R1.18-billion in the reporting year compares with net property income of R1.13-billion in the prior year, having grown by 4.3% year-on-year.

Having generated a profit for the year of R931-million, the board declared a final dividend of 70.5c per A share and 22c per B share for the period, amounting to R360-million that will be paid out to shareholders.

The company’s headline earnings per share (HEPS) increased by 9.8% year-on-year to 137c for its A shares and by 11.4% year-on-year to 42c for its B shares.

Distributable income per A share of 138c compares to distributable income per A share of 132c in the prior year, while distributable income per B share of 43c compares to distributable income per B share of 41c in the prior year.

Fairvest’s like-for-like net property income increased by 7.2% in the year under review, while vacancies reduced to 4.3%.

The company maintains a loan-to-value (LTV) ratio of 33.3% and a tenant retention rate of 85.7%.

With group loans amounting to R4.2-billion, the company’s LTV remains comfortably below the group and portfolio LTV covenant limit of 50% for its facilities. As of September 30, Fairvest had R419-million of cash and undrawn facilities.

The group’s portfolio comprises 128 retail, office and industrial properties valued at R12.3-billion. About 48% of Fairvest’s 1.03-million square metres of gross leasable area is based in Gauteng, followed by the Western Cape and KwaZulu-Natal.

Fairvest says it experienced positive letting activity in the reporting year, as well as a strong performance from all its assets, having signed 531 new deals and 476 renewals.

The company’s average gross rental increased by 7.8% year-on-year to R127.52/m². The weighted average lease escalation across the portfolio was stable at 6.6%, with a weighted average lease expiry of 28.6 months.

Fairvest continued to invest in the quality of its portfolio with capital expenditure of R274.3-million, which was 44.1% more than the prior year.  

During the period, Fairvest installed another four solar plants, resulting in a total installed capacity of 20.3 MW across 42 plants. These solar plants provide 10.6% of the combined portfolio’s electricity needs.

Twelve additional plants are undergoing feasibility assessments, which will add 4.3 MW of capacity.

Fairvest anticipates net property income growth across all its operating sectors on a like-for-like basis in the new financial year, on the back of eased inflation, lower interest rates and its portfolio being operationally strong.

CEO Darren Wilder says the company remains focused on transitioning to a retail-focused portfolio by selling non-core assets. In the year under review, the company finalised six disposals comprising mostly office properties for R280-million.

Retail properties currently contribute 69% of group revenue, followed by office properties with 19.1% and industrial properties with 11.9%.

The company expects its distributable earnings per B share to be between 45c and 46c in the new financial year, marking a year-on-year increase of between 4% and 6.3% compared with the 2024 financial year, while its distribution per A share will increase by 5% or in line with the consumer price index – whichever is lower.