Fairvest grows footprint with $26.8 million mall acquisitions

Fairvest acquisition

At a Glance

Fairvest acquires $26.8 million in malls, expanding retail footprint in underserved South African markets.
Interim results show 8.8% distribution growth, 5.1% rise in net property income.
Strong balance sheet, $30.8 million liquidity supports further expansion in low-income retail sectors.

Fairvest Limited, a leading South African retail-focused real estate investment trust (REIT), has boosted its footprint in country’s retail property sector with the acquisition of five commuter-focused shopping centres across KwaZulu-Natal and the Western Cape, valued at approximately R477.7 million ($26.8 million).

This move aligns with Fairvest’s strategic pivot toward becoming a retail-only Real Estate Investment Trust (REIT) concentrating on underserved, low-income communities.

The new properties add over 34,000 square meters of gross lettable area (GLA) to Fairvest’s portfolio, enhancing its presence in key regional retail markets.

Highlights include the Nquthu, Ulundi, and Eyethu Junction malls in KwaZulu-Natal, acquired for R208.7 million ($11.7 million) from Collins Property Group subsidiaries, with an attractive yield of 9.75 percent.

Additional purchases include the Shoprite Manguzi centre in northern KwaZulu-Natal for R136 million ($7.6 million) and a 51 percent stake in Thembalethu Square in the Western Cape for R133 million ($7.5 million).

Robust interim results underscore growth momentum

Fairvest’s acquisitions come amid a solid interim financial performance for the six months ending March 31, 2025. Distribution per B share increased 8.8 percent to 23.10 cents, supported by a 5.1 percent rise in like-for-like net property income.

The REIT maintains a strong operational profile, with vacancy rates low at 5.5 percent and tenant retention exceeding 81.3 percent.

Over the period, the company concluded 236 new leases and 216 renewals, extending the weighted average lease expiry to nearly four years (47.3 months).

The group also improved its balance sheet health, reducing its loan-to-value (LTV) ratio to 31.8 percent from 33.3 percent, while lowering its average interest rate to 9.38 percent.

Capital expenditures totaled R139 million ($7.8 million), with investments in solar energy projects and income-generating fiber infrastructure reinforcing Fairvest’s commitment to sustainability and value-add initiatives.

Well-capitalized for continued expansion in underserved markets

CEO Darren Wilder emphasized Fairvest’s “operationally robust fundamentals” and prudent balance sheet management as key drivers of sustainable growth.

The company expects full-year distribution per B share growth of 8 to 10 percent, outpacing inflation, with A share distributions rising in line with consumer price index (CPI) guidelines.

As of March 2025, Fairvest held 127 properties nationwide, generating R1.06 billion ($60 million) in revenue for the half-year—up from R998.4 million ($56.1 million) in 2023.

Retail assets now contribute nearly 70 percent of revenue. Additionally, Fairvest’s increased stake in JSE-listed Dipula from 5 percent to 26.3 percent bolsters earnings and asset value.

With R547.4 million ($30.8 million) in available cash and credit facilities, Fairvest remains well-positioned to capitalize on growth opportunities in South Africa’s underserved retail property markets.

Fairvest Limited launched R30 million ($1.7 million) redeveloped Rosebank Quarter, a newly refurbished mixed-use commercial property in the Rosebank district.

Timilehin Adejumobi