Fairvest, a shareholder in Dipula Income Fund since 2014, has increased its stake from 5% to 26.3%, the retail-focused real estate investment trust (Reit) said on Friday.
Fairvest raised R1bn to increase its stake in Dipula. Over the past 20 years, Dipula has shifted away from offices and focused on retail, with plans to continue growing its retail portfolio.
Fairvest CEO Darren Wilder said: “We have known the CEO of Dipula, Izak Petersen, for many years, during which we have been a supportive shareholder of Dipula. We are delighted to be able to increase our shareholding in Dipula, a business we know and like, which has a lot of similarities to Fairvest’s business. We hope to take this relationship to the next level”.
Fairvest ended the year with a dividend of 138.34c per A share and 43.29sc per B share, surpassing market guidance.
The retail-focused Reit, which specialises in non-metropolitan and rural shopping centres, reduced vacancies to 4.3%, achieved 7.2% like-for-like net property income growth, and recorded positive rental reversions of 3.6%.
The group achieved an 85.7% tenant retention rate and improved positive rental reversions from 2.8% to 3.6%.
Average gross rental rose 7.8% to R127.52/m². The portfolio's lease escalation remained steady at 6.6%, with a weighted average lease expiry of 28.6 months. Fairvest invested R274.3m in capital expenditure, up 44.1% from the previous year.
“Fairvest has made pleasing headway in restructuring its portfolio in the past three years towards becoming a retail-only Reit servicing low-income communities in SA by disposing of noncore assets and reinvesting in retail-focused properties,” said Wilder.
Wilder noted that R1.3bn in disposals were made at a premium to book value and an average yield of 8.1%. By focusing on property fundamentals, the fund has consistently delivered strong performance, and shareholder returns since the merger with Arrowhead.
Since the merger, Fairvest’s strategy has been to transition to a retail-focused fund.
The owner of Soshanguve South View shopping centre had R4.2bn in loans, resulting in a stable loan-to-value (LTV) ratio of 33.3%, unchanged from the previous year. This remains well below the group's 50% LTV covenant limit.
During the year, six disposals worth R280.3m were completed, yielding an average of 1.2% and a 0.4% discount to book value. These included three office properties with a combined vacancy of over 25%.
The group has also made notable progress with its backup power strategy, ensuring business continuity during disruptions. Currently, 46% of the portfolio’s GLA has access to backup power.
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