Fairvest is cautiously optimistic that South Africa’s property market is turning a corner after a challenging period, with the real estate investment trust’s (REIT) strong results offering a dose of confidence as operating conditions begin to improve.
Fairvest announced its results for the year ended September 30, reporting distributions of 142.57 cents per A share and 48.15c per B share, paid out at a 100% ratio. The REIT also posted a 5.8% rise in like-for-like net property income, reduced vacancies of 4.1%, and a lower loan-to-value ratio of 25.6%.
“These results demonstrate the disciplined execution of a clear strategy coupled with a strong operating platform that will continue to deliver future growth,” said Fairvest CEO Darren Wilder.
“We’ve just come out of a very tough environment, but we’re moving towards a stronger property cycle.”
Fairvest said the results were supported by improvements in the national electricity grid, easing inflation, and moderating interest rates, which have bolstered operations, despite ongoing municipal service challenges and a fragile macroeconomic environment.
Wilder noted that part of Fairvest’s resilience comes from the management team’s experience navigating both “bull and bear” markets. “When you’re moving in and out of these different markets, you prepare your portfolio according to what’s coming around the corner.”
He added that since 2022, Fairvest has been proactively adjusting its strategy to insulate against external challenges.
One of Fairvest’s strategies is to prioritise retail assets, investing R288.9m in its property portfolio, acquiring seven retail properties valued at R1.15bn and disposing of industrial and office assets worth R99m.
Fairvest said these transactions support its strategy to build a retail-only fund focused on non-metropolitan properties near commuter hubs and transport interchanges, anchored by major national tenants serving previously underserviced markets across South Africa.
Retail assets already represent close to 71% of Fairvest’s revenue and value, with offices and industrial assets comprising the remainder.
The REIT also received a dividend of R123.3m from its 23.6% stake in Dipula Properties Ltd.
Additionally, Fairvest prioritises assets that are resilient to market changes. The company is a leader in integrating digital infrastructure with traditional retail properties, having invested R477m in its subsidiary, Onepath Investments, which provides fibre network infrastructure in townships, generating rental income with a dividend yield exceeding 12% of invested capital.
“The returns from digital assets underpin some of the best performing REITs, benefiting from growing structural demand that’s not necessarily tied to an economic cycle,” said Wilder.
He added that rather than pushing rental rates too hard on renewals, Fairvest has focused on securing longer leases with higher escalations. The strategy supported strong letting activity, with 537 new deals and 504 renewals, a tenant retention rate of 83%, and average gross rent rising 5.2% to R134.18 per square metre.
Looking ahead, Fairvest expects distributable earnings per B share to rise by 9%-11% in 2026, with A share dividends growing by the lesser of 5% or the Consumer Price Index, in line with their memorandum of incorporation.
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