Latest news with #Fairvest
IOL News
4 days ago
- Business
- IOL News
Fairvest reports robust interim distributable income growth and acquires five properties
Fairvest's Southview Centre in Soshanguwe. The group is steadily transforming its diversified commercial property portfolio to one that focuses on retail centres for lower income communities. Image: Supplied Fairvest, which Friday announced the acquisition of five properties for R477.7 million, increased its interim distribution for its B share by 8.8%, a performance well above inflation and which ranks it among the leaders in South Africa's REIT sector at present. Fairvest owns and manages a portfolio of 127 retail, office, and industrial properties, valued at R12.5 billion. During the six months to March 31, the group increased its stake in Dipula Properties to 26.3% from 5%, which was accretive to earnings and loan-to-value. 'Fairvest is making progress in transforming its diverse portfolio by improving the quality, while pursuing its aim of becoming a retail-only REIT servicing low-income communities in South Africa. The portfolio transformation is taking place at a slow and measured pace,' CEO Darren Wilder said in an interview. The strategy involves disposing of non-core assets and reinvesting in retail-focused properties - about 70% of revenue is currently generated from retail properties, he said. Consistent with this plan, Fairvest acquired five retail properties in KwaZulu-Natal and the Western Cape: Nquthu Shopping Centre, Ulundi Shopping Centre, Eyethu Junction, and Shoprite Manguzi in KwaZulu-Natal. These shopping centres have key food retailers, including Shoprite, Boxer, and SuperSpar, as anchor tenants. Also, an agreement was reached to acquire Thembalethu Square, outside George in the Western Cape, which is anchored by Shoprite and Boxer. Fairvest owns 51% of the issued shares in the new acquiring company. Wilder said they were 'always on the lookout' for assets that fitted their strategic focus. Fairvest disposed of one industrial property valued at R24m during the period and at a 14.3% premium to book value. Capital expenditure of R139m included R19.8m for further investments in solar initiatives. The group also invested R76.6m in fibre network infrastructure, which earns rental income. 'The portfolio continues to benefit from the disciplined execution of our strategy - vacancies remain consistently low, tenant quality has improved and the portfolio remains operationally robust. These solid fundamentals, combined with conservative balance sheet management, position the group for sustained growth,' said Wilder. There was positive letting activity in the six months, with 236 new deals and 216 renewals. Vacancies edged up to 5.5% from 4.3%. The entire 8% increase in property expenses was linked to higher municipal costs. Excluding this, operating expenses decreased by 1.9%. Property expenses were expected to increase around 7% for the year, said Wilder. Net loans of R4.4bn represented a loan-to-value of 31.8%, a reduction from 33.3% at the September 2023 year end. Cash on hand and undrawn debt facilities stood at R547.4m by the end of the interim period. Progress was made on the business continuity strategy - around 48.3% of the portfolio's gross lettable area has access to either partial or complete backup power. The number of solar plants stood at 46, with total installed capacity of 21.9 MWp. These plants provided 16.7% of the combined portfolio's electricity needs in the six months. Clean, renewable energy generated during this time amounted to R33.1m. A further eight plants were expected to add some 2.1 MWp of capacity.
Yahoo
16-05-2025
- Business
- Yahoo
Dipula Properties Ltd (JSE:DIB) (H1 2025) Earnings Call Highlights: Navigating Growth Amidst ...
Release Date: May 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Dipula Properties Ltd (JSE:DIB) reported a 4% increase in turnover and distributable earnings, indicating stable growth. The company successfully renewed 136 leases, contributing to a positive lease expiry profile and a 3% increase in net property income. Dipula Properties Ltd (JSE:DIB) achieved a positive renewal rate across its retail, industrial, and office portfolios, reflecting strong leasing activity. The company's sustainability initiatives, including a 90 million rand commitment to solar projects, are expected to enhance operational efficiency. Dipula Properties Ltd (JSE:DIB) maintained a strong balance sheet with a 36% gearing ratio and a 6% increase in net asset value (NAV). Tenant retention ratio decreased from 89% to 79%, indicating potential challenges in maintaining existing tenants. The office portfolio faced a decrease in performance due to property disposals and negative reversions on government leases. Interest rate uncertainties pose a significant risk to future financial performance, impacting debt and swap agreements. The residential sector experienced a high vacancy rate of 9%, with plans to exit the sector due to lack of scale. Cost to income ratio increased from 43% to 44%, driven by higher municipal tariffs and property-related expenses. Warning! GuruFocus has detected 11 Warning Signs with JSE:DIB. Q: The financial year results guidance was for distribution growth of at least 5%, but this has been downgraded to 4 to 6%. What is the reason for this? A: There is a significant concern around interest rates. Our escalations are skewed towards the second half of the year, and if swaps expire with a consistently higher rate that doesn't decrease as expected, it impacts our projections. Q: Can we get an update on discussions with Fairvest? Also, given the strong operating performance and cash balance, how are you thinking about the full-year payout ratio versus CapEx or de-gearing? A: Regarding Fairvest, it's business as usual with no current deals on the table. We maintain a friendly relationship, and they allow us to focus on running our business. The extra liquidity is allocated towards enhancing redevelopments, revamps, re-tenanting opportunities, and solar projects. The payout ratio will remain at 90% as per the board's decision. Q: What are the main contributors to the growth in your property portfolio and net asset value (NAV)? A: The growth in our property portfolio, close to 5%, is driven by property valuations and capitalized expenses over the last 12 months. This, combined with a further 100 million rand facility for value-enhancing initiatives, has increased our interest-bearing liabilities to 3.8 billion. These factors have contributed to a 6% growth in our NAV, now at 6.4 billion. Q: How has the office portfolio performed, and what are the challenges faced? A: The office portfolio has seen a decrease due to property disposals and the impact of government lease renewals. These leases, concluded in December 2023, had negative reversions not fully felt until February 2024. The market remains competitive with an oversupply of office spaces, but inquiries are increasing, and some properties are being repurposed for alternative uses. Q: What sustainability initiatives are you focusing on, and what progress has been made? A: We have committed 90 million rand for phase two of our solar projects, aiming for 16 megawatts of own generation. We are also engaged in water-saving initiatives, with significant progress reported. Our sustainability efforts include improving property efficiency and ensuring continuous trade despite power interruptions. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
