Construction World April 2021

MAINTAININGAROBUST PERFORMANCE Fairvest recently announced results for the six months to December 2020 that portrayed strong improvements in property fundamentals and a pleasing 7,2% increase in distribution against the most recent six months to 30 June 2020, which were at the height of the COVID-19 lockdown. When compared against the pre-COVID corresponding period of 31 December 2019, however, the distribution decreased by 5,1%.

F airvest maintains a unique focus on retail assets weighted toward non-metropolitan and rural shopping centres, as well as convenience and community shopping centres servicing the lower-income market in high growth nodes, close to commuter networks. The Fairvest property portfolio consists of 43 properties with 250 911 m 2 of lettable area, valued at R3 425-billion. Chief Executive Officer, Darren Wilder (pictured) said that Fairvest’s specialist, niche positioning of smaller neighbourhood centres with grocery-anchored assets, and an emphasis on essential shopping, with a focused, hands-on management team has been more resilient during the COVID-19 pandemic with the recovery being quicker than anticipated, and without significant increases in vacancies. Countrywide, food retailers demonstrated the most resilient trading densities of all merchandise categories, and smaller format retail outlets outperformed as consumers redirected their spending power toward convenience shopping closer to home. Resilient distributions Total property revenue increased by 2,3% to R274,2-million, as a result of income growth in the historic portfolio and acquisitions in the latter half of the previous financial year, offset by the disposal of Tokai Junction. Net profit from property operations increased by 4,6% to R176,5-million. Expenses were well contained, assisted by significant solar savings at properties, but countered by the effect of rental concessions provided to tenants, as well as the substantial increase in the provision for expected credit losses on rental

COVID-19 pandemic on the local economy remains uncertain, given the pace of the vaccine rollout and potential further infection waves which may impact tenants. Fairvest remains well-positioned with a defensive portfolio of grocery-anchored assets in smaller, more convenient centres., a conservative balance sheet with modest gearing levels, and more than R220-million of undrawn debt facilities. The focus areas remain to maintain viable tenancies and letting of vacancies, with a strong focus to reduce arrears even further. After taking into consideration the uncertain environment described above, as well the performance of the past six months, the Fairvest board expects the distribution per share for the full 2021 financial year to be between 0% and 2% higher than the previous year. The board has also again resolved to maintain the current dividend pay-out ratio of 100% of distributable earnings. Any changes to this policy will be communicated to shareholders at least 12 months before any changes are implemented. Wilder said that Fairvest’s philosophy has always been to maintain a simple property business and to focus on the basics. “We are determined to continue to keep an uncomplicated traditional property business with a conservative balance sheet and income statement, devoid of complex financial structures. We continue to maintain and grow a portfolio of quality assets with strong property fundamentals and to provide hands-on property management, as we strive to continue to add value for our shareholders.” ▄

billed during the COVID-19 lockdown period. COVID-19 impact contained Most rent relief negotiations with tenants have been concluded during the reporting period. Additional rental remissions of R9,7-million were conceded for the six months to 31 December 2020. During the period net arrears decreased by 26,7% to R16,7-million. Collection of deferrals have been better than anticipated and we expect arrears to decrease further by the end of the financial year. Disciplined, conservative financial management Wilder said that Fairvest’s balance sheet remains strong, with a conservative loan to value (“LTV”) ratio and a comfortable interest cover ratio. The LTV ratio decreased to 32,2% (June 2020: 36,3%) mainly due to the disposal of Tokai Junction during the period, offset by further investments in solar projects. Of the debt, 72,3% was fixed through interest rate swaps as at 31 December 2020, with a weighted average expiry for the fixed debt

of 34 months. Prospects Fairvest said that the lasting impact of the

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CONSTRUCTION WORLD APRIL 2021