FAIRVEST PROPERTY HOLDINGS LIMITED - Audited Summarised Consolidated Results and Cash Dividend Declared for the Year Ended 30 June 2018

Release Date: 04/09/2018 07:05
Code(s): FVT
 
Wrap Text
Audited Summarised Consolidated Results and Cash Dividend Declared for the Year Ended 30 June 2018

FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in South Africa)
(Registration number 1998/005011/06)
("Fairvest" or "the company" or "the group")
Share code: FVT
ISIN: ZAE000203808
Granted REIT status by the JSE

AUDITED SUMMARISED CONSOLIDATED RESULTS
AND CASH DIVIDEND DECLARATION FOR THE
YEAR ENDED 30 JUNE 2018

HIGHLIGHTS

Top performing SA REIT with 17.9%
annualised total return to shareholders
for the 2018 financial year

Distribution for the year increased by 9.91%
to 20.150 cents per share

Total property portfolio increased by
35.5% to R2.99 billion

Raised R422.4 million of new equity

Net asset value increased by 4.4%
to 227.78 cents per share

Vacancies decreased to 3.5% of total lettable area

Like-for-like net property income increased by 11.7%

Tenant retention remain high at 86.9%

SUMMARISED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2018

                                                                                   Audited       Audited   
                                                                                   30 June       30 June   
                                                                                      2018          2017   
                                                                                     R'000         R'000   
Assets                                                                                                     
Non-current assets                                                               3 242 160     2 263 812   
Investment property                                                              2 928 514     2 157 747   
Loans receivable                                                                   258 008        61 603   
Investments                                                                          4 772         2 154   
Office equipment                                                                       311           343   
Operating lease asset                                                               50 555        41 965   
Current assets                                                                      82 815        54 110   
Loans receivables                                                                    4 900         5 476   
Amounts owing by non-controlling interests                                           5 980             -   
Trade and other receivables                                                         61 989        36 000   
Cash and cash equivalents                                                            9 943        12 634   
Total assets                                                                     3 324 972     2 317 922   
Equity and liabilities                                                                                     
Equity attributable to owners of the company                                     2 257 385     1 723 218   
Share capital                                                                      747 349       327 951   
Retained earnings                                                                1 510 036     1 395 267   
Non-controlling interest                                                           106 469         4 454   
Total equity                                                                     2 363 854     1 727 672   
Non-current liabilities                                                            469 212       309 366   
Interest-bearing borrowings                                                        342 845       272 339   
Amounts owing to non-controlling interests                                         112 788        23 756   
Derivative financial instrument                                                      2 073         4 404   
Deposits received                                                                   10 836         8 395   
Deferred taxation                                                                      670           472   
Current liabilities                                                                491 906       280 884   
Interest-bearing borrowings                                                        411 931       224 652   
Trade and other payables                                                            79 975        56 232   
Total equity and liabilities                                                     3 324 972     2 317 922   
                      
                      
SUMMARISED CONSOLIDATED                      
STATEMENTS OF PROFIT OR LOSS AND 
OTHER COMPREHENSIVE INCOME                      
FOR THE YEAR ENDED 30 JUNE 2018                      
                      
                                                                                  Audited        Audited   
                                                                             12 months to   12 months to   
                                                                                  30 June        30 June   
                                                                                     2018           2017   
                                                                                    R'000          R'000   
Revenue                                                                           404 257        331 142   
Rental income - contractual                                                       392 424        320 431   
- straight-line adjustment                                                         11 833         10 711   
Other income                                                                        3 780              -   
Property expenses                                                               (143 293)      (121 690)   
Net property income                                                               264 744        209 452   
Corporate administrative expenses                                                (25 046)       (19 393)   
Operating profit                                                                  239 698        190 059   
Fair value adjustment to investment properties                                    108 241        159 348   
Fair value adjustment to derivatives                                                2 331        (2 459)   
Fair value adjustment to investments                                                  (7)             90   
Finance costs                                                                    (77 876)       (53 091)   
Finance and other investment income                                                27 175          9 420   
Profit before capital expenses                                                    299 562        303 367   
Capital expenses                                                                  (5 605)          (557)   
Profit before tax                                                                 293 957        302 810   
Income tax                                                                          (198)          (191)   
Total comprehensive income for the period                                         293 759        302 619   
Profit and total comprehensive income for the period                                                       
- Owners of the parent                                                            273 289        299 234   
- Non-controlling interest                                                         20 470          3 385   
                                                                                  293 759        302 619   
Reconciliation between profit attributable to shareholders,                                                
distributable earnings and headline earnings per share                                                     
Comprehensive income attributable to owners of the parent                         273 289        299 234   
Fair value adjustment to investment properties (attributable to owners           
of the parent)                                                                    (93 474)      (157 283)                            
Headline and diluted headline profit attributable to shareholders                 179 815        141 951   
Distributable earnings calculation                                                                         
Net profit from property operations                                               264 744        209 452   
Straight-line rental income accrual                                              (11 833)       (10 711)   
Corporate administrative expenses                                                (25 046)       (19 393)   
Finance costs                                                                    (76 081)       (52 673)   
Finance and other investment income                                                27 175          9 420   
Share issued cum distribution                                                      13 146          8 267   
Non-controlling interest share of distribution                                    (5 159)          (443)   
Distributable earnings                                                            186 946        143 919   
Distribution                                                                      186 946        143 919   
Dividend                                                                                                   
Interim dividend per share (cents)                                                  9.806          8.953   
Final dividend declaration per share (cents)                                       10.344          9.380   
Total dividend per share (cents)                                                   20.150         18.333   
Earnings per share                                                                                         
Basic and diluted earnings per share (cents)                                        31.69          40.53   
Headline and diluted headline earnings per share (cents)                            20.85          19.23   
Net asset value per share (cents)                                                  227.78         218.18   
Share statistics                                                                                           
Shares in issue                                                               991 020 553    789 836 312   
Treasury shares                                                                         -       (12 067)   
Effective shares in issue                                                     991 020 553    789 824 245   
Weighted average number of shares                                             862 248 577    738 319 633   


SUMMARISED CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
AS AT 30 JUNE 2018

                                                                        Equity                             
                                                                  attributable          Non-               
                                              Share    Retained   to owners of   controlling       Total   
                                            capital    earnings    the company      interest      equity   
                                              R'000       R'000          R'000         R'000       R'000   
Balance at 1 July 2016                      105 332   1 221 747      1 327 079         1 081   1 328 160   
Shares issued                               224 494           -        224 494             -     224 494   
Capital issue expenses                      (1 852)           -        (1 852)             -     (1 852)   
Acquisition of treasury shares                 (23)           -           (23)             -        (23)   
Dividends paid and declared                       -   (125 714)      (125 714)          (12)   (125 726)   
Total comprehensive income for the period         -     299 234        299 234         3 385     302 619   
Balance at 30 June 2017                     327 951   1 395 267      1 723 218         4 454   1 727 672   
Shares issued                               422 379           -        422 379             -     422 379   
Capital issue expenses                      (3 004)           -        (3 004)             -     (3 004)   
Acquisition of treasury shares                  (2)           -            (2)             -         (2)   
Disposal of treasury shares                      25           5             30             -          30   
Acquisition of subsidiary with 
non-controlling interests                         -           -              -        81 989      81 989   
Dividends paid and declared                       -   (158 525)      (158 525)         (444)   (158 969)   
Total comprehensive income for the period         -     273 289        273 289        20 470     293 759   
Balance at 30 June 2018                     747 349   1 510 036      2 257 385       106 469   2 363 854   


SUMMARISED CONSOLIDATED
STATEMENTS OF CASH FLOWS
AS AT 30 JUNE 2018

                                                                                  Audited        Audited   
                                                                             12 months to   12 months to   
                                                                                  30 June        30 June   
                                                                                     2018           2017   
                                                                                    R'000          R'000   
Cash generated from operations                                                    213 511        182 446   
Finance costs                                                                    (69 873)       (50 786)   
Finance and other investment income                                                 2 500          1 631   
Dividends paid                                                                  (158 517)      (125 136)   
Cash inflow from operating activities                                            (12 379)          8 155   
Acquisitions of and improvements to investment property                         (249 662)      (151 265)   
Development of investment property                                               (78 037)              -   
Acquisition of subsidiary                                                        (81 586)              -   
Acquisition of investment                                                         (2 625)              -   
Acquisition of office equipment                                                      (69)              -   
Cash outflow to investing activities                                            (411 979)      (151 265)   
Net interest-bearing borrowings advanced/(repaid)                                  97 769       (78 004)   
Net amounts owing to non-controlling interests raised                              75 914          8 291   
Net advances to loans receivable                                                (171 419)        (7 078)   
Proceeds from issue of share capital                                              419 375        222 642   
Repurchase of treasury shares                                                         (2)           (23)   
Proceeds from disposal of treasury shares                                              30              -   
Cash inflow from financing activities                                             421 667        145 828   
Net (decrease)/increase in cash and cash equivalents                              (2 691)          2 718   
Cash and cash equivalents at beginning of period                                   12 634          9 916   
Cash and cash equivalents at end of period                                          9 943         12 634   


CONDENSED CONSOLIDATED
SEGMENT REPORT

                                                                                                                 Reconciling               
                              KwaZulu-   Western                Free   Northern             Eastern   Mpuma-          items/               
                                 Natal      Cape   Gauteng     State       Cape   Limpopo      Cape    langa  (Eliminations)       Total   
FOR THE YEAR ENDED                                                                                                                          
30 JUNE 2018                                                                                                                                
Revenue - external customers   103 138    77 289    69 372    50 816     39 121    20 913    21 256   10 519               -     392 424   
Operating profit                74 055    50 146    49 240    32 762     21 583    14 124    16 110    6 724        (25 046)     239 698   
Total assets                   801 520   547 216   746 040   332 620    220 280   137 067   157 280   67 174         315 774   3 324 971   
FOR THE YEAR ENDED                                                                                                                          
30 JUNE 2017                                                                                                                                
Revenue - external customers    70 689    66 944    44 794    47 737     37 415    20 089    21 191   11 572               -     320 431   
Operating profit                56 307    45 265    24 713    27 208     19 845    14 045    16 144    5 925        (19 393)     190 059   
Total assets                   603 980   477 613   296 230   311 473    200 229   131 543   142 918   63 940        89 996 2   2 317 922   


OTHER SEGMENTAL INFORMATION

                                                                                       Audited   Audited   
                                                                                       30 June   30 June   
                                                                                          2018      2017   
Regional profile based on leasable area                                                                    
Gauteng                                                                                  25.0%     15.5%   
KwaZulu-Natal                                                                            23.8%     22.4%   
Western Cape                                                                             17.8%     20.9%   
Free State                                                                               12.5%     15.4%   
Northern Cape                                                                             7.3%      9.2%   
Eastern Cape                                                                              6.8%      8.3%   
Limpopo                                                                                   4.8%      5.9%   
Mpumalanga                                                                                2.0%      2.4%   
Vacancy profile based on gross lease area                                                                  
Gross lease area in metres squared as at end of period                                 237 965   194 311   
Properties held                                                                             44        41   
Vacancy area in metres squared                                                           8 255     9 094   
Vacancy area as % of gross lease area                                                     3.5%      4.7%   
Regional vacancy profile (m2)                                                                              
(regions where vacancies are located)                                                                      
Gauteng                                                                                  3 743     2 327   
Western Cape                                                                             2 122     1 690   
KwaZulu-Natal                                                                            1 002     1 467   
Free State                                                                                 721     2 425   
Northern Cape                                                                              611       483   
Limpopo                                                                                     50       652   
Eastern Cape                                                                                 6         -   
Mpumalanga                                                                                   -        50   
 

NOTES TO SUMMARISED CONSOLIDATED
FINANCIAL STATEMENTS

BASIS OF PREPARATION AND ACCOUNTING POLICIES
The preparation of these audited summarised consolidated financial statements was supervised by the Chief
Financial Officer, BJ Kriel CA(SA).

The accounting policies applied in the preparation of these audited summarised consolidated results for the
year ended 30 June 2018, which are based on reasonable judgements and estimates, are in accordance
with International Financial Reporting Standards ("IFRS") and are consistent with those applied in the annual
financial statements for the year ended 30 June 2017. Any other new and amendments to IFRS and IFRIC
interpretations did not impact on the financial position or performance of the company but has resulted in
additional disclosures. These audited summarised consolidated results, as set out in this report, have been
prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS 
and containing the information required by IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting 
Guidelines as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by 
the Financial Reporting Council, the Companies Act of South Africa, No. 71 of 2008, as amended ("Companies Act") 
and the Listings Requirements of JSE Limited.

This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. The full Annual
Financial Statements is available at the company's registered office upon request. 

In terms of IAS 39: Financial Instruments: Recognition and measurement and IFRS 7, the group's interest rate
derivatives are measured at fair value through profit or loss and are categorised as level 2 investments. Interest
rate derivatives are valued using discounted cash flow techniques and observable market interest rates off the
interest rate yield curve. There were no transfers between levels 1, 2 and 3 during the period.

The revaluation of investment property requires judgement in the determination of future cash flows from
leases. An appropriate capitalisation rate which varies between 9.25% and 10.75%, with a discount rate
of between 14.00% and 15.25% was used.

Changes in the capitalisation and discount rates are attributable to changes in market conditions and can
have a significant impact on the property valuations. A 25 basis points decrease in the capitalisation rate
will increase the value of investment property by R50.9 million. A 25 basis points increase in the discount
rate will decrease the value of investment property by R23.6 million.

These audited summarised consolidated results for the year ended 30 June 2018 have been prepared in
accordance with the historic cost basis, except for the measurement of investment properties and certain
financial assets and financial liabilities which are stated at fair value.

The financial results are presented in Rands, which is Fairvest's functional and presentation currency and
have been prepared on a going-concern basis.

AUDIT REPORT
The audited summarised consolidated results for the year ended 30 June 2018 set out in this
announcement, have been extracted from the group's consolidated annual financial statements
which have been audited by BDO South Africa Inc, but are not themselves audited. A copy
of their unmodified audit opinion is available for inspection at the company's registered office.
Any reference to future financial performance included in this announcement has not been reviewed or reported
on by the company's auditors.

The directors take full responsibility for the preparation of the audited summarised consolidated results presented
and that the financial information has been correctly extracted from the underlying financial statements.

ESTIMATES AND CRITICAL JUDGEMENTS
Except for the measurement of investment properties, and certain financial assets and financial liabilities the
financial statements do not include any material estimates.

BUSINESS COMBINATION
Shareholders are referred to the detailed SENS announcement on 19 December 2017 regarding
the subscription of shares by the company in Bara Precinct Proprietary Limited ("Bara Precinct").
On 18 December 2017, the company subscribed for 50.17% of the shares in Bara Precinct, obtaining control
and Bara Precinct became a subsidiary of the company.

Bara Precinct owns five and leases two immovable properties in Diepkloof, Soweto. The transaction is in
line with Fairvest's strategy of acquiring assets servicing the lower living standards measure (LSM) market,
located in non-metropolitan areas, as well as rural, convenience and community shopping centres located in
high-growth nodes, close to commuter networks, with a view to providing shareholders with attractive returns
and distinctive, diversified opportunities.

The subscription consideration to the value of R82.5 million was cash paid on 18 December 2017.

ASSETS ACQUIRED AND LIABILITIES ASSUMED
The fair values of the identifiable assets and liabilities of Bara Precinct at the date of acquisition were:

                                                                                             Fair value at   
                                                                                               acquisition   
                                                                                                     R'000   
ASSETS                                                                                                       
Investment property                                                                                322 435   
Trade and other receivables                                                                        180 491   
Cash and cash equivalents                                                                              951   
TOTAL ASSETS                                                                                       503 877   
LIABILITIES                                                                                                  
Interest-bearing borrowings                                                                        157 633   
Trade and other payables                                                                           181 718   
TOTAL LIABILITIES                                                                                  339 351   
Total identifiable net asset value                                                                 164 526   
Non-controlling interest                                                                          (81 989)   
Goodwill                                                                                                 -   
Subscription consideration paid 18 December 2017 in cash                                            82 537   
Cash flow on acquisition                                                                                     
Net cash acquired with subsidiary                                                                      951   
Cash paid                                                                                         (82 537)   
Net cash outflow on acquisition                                                                   (81 586)   


The fair value of the investment properties and the non-controlling interest at acquisition were calculated
utilising the capitalisation rate method.

Transaction costs of R3.4 million were incurred on the acquisition and have been recognised in profit or loss.

From the date of acquisition, the Bara Precinct transaction contributed R18.1 million to contractual rental
income and R17.9 million to the comprehensive income attributable to shareholders. If the acquisition
had taken place at the beginning of the reporting period, rental income would have been R49.4 million
and comprehensive income attributable to shareholders for the group would have been R2.2 million
for the reporting period.

COMMENTARY

INTRODUCTION
Fairvest is a Real Estate Investment Trust ("REIT"), with 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 LSM market, in high-growth nodes, close to commuter networks. The Fairvest property portfolio
consists of 44 properties, with 237 965m2 of lettable area and valued at R2.99 billion.

REVIEW OF RESULTS
Fairvest's board of directors is pleased to announce a 10.28% increase in the final dividend distribution to
10.344 cents per share for the six months ended 30 June 2018, which brings the total combined dividend
for the year to 20.150 cents per share, resulting in a 9.91% increase from the previous year and maintaining
distribution growth within the issued guidance of 9% to 10%.

                                                                        Interim        Final       Total   
Jun 14                                                                    6.750        6.970      13.720   
Jun 15                                                                    7.427        7.679      15.106   
Jun 16                                                                    8.171        8.489      16.660   
Jun 17                                                                    8.953        9.380      18.333   
Jun 18                                                                    9.806       10.344      20.150   

Revenue increased by 22.1% to R404.3 million, as a result of income growth in the historic portfolio, as well
as acquisitions during the period. Net profit from property operations increased by 26.4% to R264.7 million,
while corporate administration expenses increased by 29.1% to R25.0 million. Distributable earnings increased
by 29.9% to R186.9 million.

A strong focus remains on cost containment and efficient recoveries of municipal charges, which improved the
net property expense ratio (expenses net of utility recoveries) to 13.0% compared to 15.5% for the previous
financial year. Certain municipal expenses provided for in the previous financial years, that were lower than
anticipated also contributed to the large improvement. Gross cost to income ratio reduced from 37.6% to 36.4%.

The weighted average contractual escalation for the portfolio remained unchanged at 7.4%. Gross
rentals across the portfolio trended upwards, with a 7.9% increase in the weighted average rental to
R112.50/m2 at 30 June 2018 compared to R103.99/m(2) at 30 June 2017. This was as a result of
a significant increase in rental achieved on new leases, slightly offset by a 6.9% increase on renewals.
The weighted average retail rental increased to R110.91/m(2).

The net asset value increased by 31.0% to R2.26 billion compared to R1.72 billion at 30 June 2017.
On a per share basis, this equates to 227.78 cents per share, or an increase of 4.4%.

NET ASSET VALUE AND MARKET CAPITALISATION

                                                             Market                     Net asset value   
                                                     capitalisation   Net asset value         per share   
                                                          R'million         R'million           (cents)   
Jun 14                                                        733.4             838.9            159.00   
Jun 15                                                      1 079.0           1 105.4            184.40   
Jun 16                                                      1 020.3           1 327.1            201.60   
Jun 17                                                      1 540.2           1 723.2            218.18   
Jun 18                                                      2 081.1           2 257.4            227.78   


PROPERTY PORTFOLIO
The value of the property portfolio increased by 35.5% from R2.20 billion at 30 June 2017 to R2.99 billion.
The growth is attributable to the Bara Precinct transaction at R322.4 million, acquisitions to the value of
R181.4 million, the development of Southview Shopping Centre to the value of R92.9 million, together with
capital expenditure incurred of R65.8 million. The historic portfolio increased by 7.4% compared to 30 June
2017. Asset quality continues to improve, with the average value per property increasing by 26.3% to R67.8
million, and the average value per square metre increased by 13.9% to R12 552/m2.

PORTFOLIO VALUATION HISTORY
                                                                                Average value  Value per
                                                                     Valuation   per property       m(2)   
                                                                     R'million      R'million          R   
Jun 14                                                                 1 109.1           34.7      8 836   
Jun 15                                                                 1 361.8           40.1      9 780   
Jun 16                                                                 1 925.1           49.4     10 355   
Jun 17                                                                 2 204.4           53.8     11 345   
Jun 18                                                                 2 987.0           67.9     12 552   


In line with the accounting policy of the group, at least a third of the portfolio was valued by independent
external valuers. Of the 44 properties in the portfolio, 15 properties equating to 37.3% by value, were valued
by independent valuers, DDP Valuers, De Leeuw Valuers and Jones Lang LaSalle, with the remainder valued by
the directors. All properties are valued by independent external valuers at least every three years. The properties
are valued using a combination of a five-year discounted cash flow and the income capitalisation method.
Assumptions are made on the discount rates used to determine the present value of the cash flows and on the
capitalisation rate on an assumed sale. The weighted average discount rate used was 14.7% compared to
15.0% in 2017 and the weighted average capitalisation rate used remained unchanged at 10.2%.

ACQUISITIONS
Shareholders are referred to Fairvest's various SENS announcements, regarding certain acquisitions by the
company. Three new properties were obtained during the period.

                                                          Value                      Date of transfer/   
Property                       Location   GLA (m(2))      R'000      Anchor tenant          completion   
Shoprite Empangeni*            KwaZulu-       13 660    172 500           Shoprite           18 Jul 17   
                                  Natal                                                                 
Bara Precinct**                 Gauteng       22 721    322 435    Cambridge Food,           18 Dec 17   
                                                                        Pick n Pay                       
Southview Shopping Centre***    Gauteng        7 620     92 914           Shoprite           18 Jun 18   


 
*     The property was acquired in a newly incorporated subsidiary FPP Property Ventures 102 Proprietary Limited 
      of which Fairvest owns 51% of the shares.
**    Fairvest subscribed for 50.17% of the shares in Bara Precinct Proprietary Limited and became a subsidiary.
***   Developed in a newly incorporated subsidiary Southview Shopping Centre Proprietary Limited of which Fairvest 
      owns 50% of the shares.

DEVELOPMENT OF SOUTHVIEW SHOPPING CENTRE
As communicated to shareholders on 8 November 2017, Fairvest entered into a strategic relationship
with Abland Proprietary Limited ("Abland") in a newly incorporated subsidiary, Southview Shopping
Centre Proprietary Limited, of which Fairvest owns 50% of the shares. A vacant plot of land was acquired
in Soshanguve, Gauteng to develop a 7 620m2 shopping centre, anchored by Shoprite. Abland will
guarantee a 10% commencement yield on the development, for five years escalating at 7% annually.
Practical completion was achieved on 18 June 2018. The total development cost on the project amounted
to R92.9 million and the property was valued at R96.8 million at 30 June 2018.

VALUE CREATION
The Shoprite extension and redevelopment at Macassar Shopping Centre was completed during the year,
with capital expenditure to the value of R28.1 million being incurred.

At Middestad Mall phase 1 of the redevelopment was completed, which included upgrading the lighting,
ceilings and walkways on the ground-floor retail section. The complete redevelopment of the first floor also
commenced during the year and is expected to complete by October 2018. Total capital expenditure incurred
to date amounted to R18.9 million, with a further R25 million expected to be incurred.

PORTFOLIO COMPOSITION, LETTING AND VACANCIES
TENANT COMPOSITION AS A PERCENTAGE OF GLA

A-grade tenants                                                             74.4%   
B-grade tenants                                                              7.0%   
C-grade tenants                                                             18.6%   


A - Anchor and national tenants (48.5% are occupied by the top 10 largest tenants)
B - Franchise, professional and large tenants
C - Other

The portfolio remains well diversified across South Africa, with the four largest provinces, KwaZulu-Natal,
Western Cape, Free State and Gauteng contributing 76.6% of revenue. The high national tenant component
of 74.4% of the portfolio provides shareholders with a low risk investment profile, with national food retailers
occupying 33.8% of the portfolio.

Vacancies decreased from 4.7% to 3.5% or 8 255m2 during the year, mainly as a result of the letting of
vacancies at Middestad Mall, Clubview and Masingita, partly offset by new vacancies at The Palms and
Bara Precinct.

LEASE EXPIRY PROFILE

                                                                           Based on   Based on gross   
                                                                      rentable area           rental   
Vacant                                                                         3.5%             0.0%   
Monthly                                                                        7.5%             8.0%   
Jun 19                                                                        16.0%            17.9%   
Jun 20                                                                        20.5%            23.5%   
Jun 21                                                                        16.5%            16.6%   
Jun 22                                                                        11.1%            10.1%   
After Jun 23                                                                  24.9%            23.9%   


During the period under review, 108 new leases were concluded with a total GLA of 11 513m2. Fairvest
successfully renewed 26 497m(2) of leases, with a positive reversion of 6.9% being achieved on these renewals.
Tenant retention for the period was 86.9%, an improvement from the 72.8% for the previous financial year.
The weighted average lease term decreased from 38 to 32 months.

CAPITAL RAISING ACTIVITIES
On 2 November 2017, Fairvest placed 58 974 359 new ordinary shares through a combination of a
vendor consideration placement and a general issue of shares for cash at an issue price of R1.95 per share,
raising R115.0 million of new equity.

Shareholders are referred to the company's SENS announcements dated 9 October 2017 and 9 April 2018,
regarding the issuing of 12 289 474 and 16 284 045 new ordinary shares which were issued through the
dividend reinvestment alternative. The shares were issued at R1.90591 and R2.08524 per share respectively
resulting in the retention of R57.4 million of equity.

On 25 April 2018, Fairvest placed 113 636 363 new ordinary shares through a combination of a vendor
consideration placement and a general issue of shares for cash at an issue price of R2.20 per share, raising
R250.0 million of new equity.

BORROWINGS
The loan to value ("LTV") ratio increased to 25.1% (2017: 24.4%) due to the acquisitions during the period,
partially offset by the capital raised. LTV is calculated as total interest-bearing debt divided by total property
assets. Of the debt 45.9% was fixed through swaps as at 30 June 2018, with a weighted average expiry
for the fixed debt of 24 months. The various floating rate loans advanced at 30 June 2018, improves the
effective hedged position to 80.4%.

The weighted average all-in cost of funding decreased to 9.16% (2017: 9.46%). The weighted average
maturity of debt increased from 15 months to 17 months. Discussions on the renewal of various expiring
facilities are in progress with funders and we expect the maturity profile of debt to improve and available
facilities to increase during the next financial year.

PROSPECTS
The company will continue to provide shareholders with exposure to attractive retail assets servicing an
underserviced, non-metropolitan and lower LSM market. Against the backdrop of a lacklustre economic outlook
for South Africa, we expect to see weaker trading performance from our tenants. In spite of macroeconomic
headwinds, the portfolio with its low-risk tenant base remains well positioned to continue to achieve strong
sustainable property growth. We will remain conservatively geared and continue our endeavours to improve
the fixed portion of debt to minimise the impact of interest rate increases. Management expects distribution
growth of between 8% and 10% for the 2019 financial year.

This view assumes no material deterioration in the macroeconomic environment relative to current levels, that
no major corporate failures will occur and that tenants will be able to absorb increases in municipal and utility
costs. Forecast rental income is based on contractual lease terms and anticipated market-related renewals. This
forecast is the responsibility of the board of Fairvest and has not been reviewed or reported on by the auditors.

DIVIDEND WITH ELECTION TO REINVEST
The board has approved and declared a final gross distribution of 10.344 cents per share for the six-month
period ended 30 June 2018, payable to shareholders registered as such at the close of business on Friday,
5 October 2018.

Shareholders will be entitled, in respect of all or part of their shareholdings, to elect to reinvest the cash
dividend of 10.344 cents per share, in return for new Fairvest ordinary shares ("Reinvestment Alternative"),
failing which they will receive the cash dividend.

Further details regarding the dividend and Reinvestment Alternative, including the tax treatment and a detailed
timetable, will be included in a separate SENS announcement, to be released today, 4 September 2018.

In accordance with Fairvest's status as a REIT, shareholders are advised that the dividend meets
the requirements of a "qualifying distribution" for the purposes of section 25BB of the Income Tax Act,
No. 58 of 1962 (Income Tax Act). The dividends on the shares will be deemed to be taxable dividends for
South African tax purposes in terms of section 25BB of the Income Tax Act.

SUBSEQUENT EVENTS
The acquisition of the Libode Shopping Centre to the value of R49 million was concluded on 29 August 2018.
The property will be acquired in a newly incorporated subsidiary, FPP Property Ventures 120 Proprietary Limited
of which Fairvest owns 55%. The directors of Fairvest are not aware of any material matters or circumstances
arising between 30 June 2018 and this report which may materially affect the financial position of the group
or the results of its operation.

APPRECIATION
We extend our appreciation to our directors, management and staff for their valued efforts as well as our
advisers and shareholders for their continuing belief in and support of Fairvest.


For and on behalf of the board

Fairvest Property Holdings Limited
3 September 2018
Cape Town


EXECUTIVE DIRECTORS
DM Wilder (Chief executive officer)
BJ Kriel (Chief financial officer)
AJ Marcus (Chief operating officer)*
*Alternate to DM Wilder

NON-EXECUTIVE DIRECTORS
JF du Toit (Chairman)
LW Andrag (Lead independent director)(#)
KR Moloko(#) (Resigned on 31 July 2018, with effect from 3 September 2018)
N Mkhize(#)
JD Wiese(#)
TJ Cohen(#)
(#) Independent

COMPANY SECRETARY
Fluidrock Co Sec Proprietary Limited (Appointed 15 August 2018)
REGISTERED OFFICE
8th Floor, The Terraces, 34 Bree Street, Cape Town, 8001
Postnet Suite 30, Private Bag X3, Roggebaai, 8012
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank
Johannesburg, 2196
PO Box 61051, Marshalltown, 2107
AUDITOR
BDO South Africa Incorporated
Registered Auditors
SPONSOR
PSG Capital Proprietary Limited

Announcement Date 
4 September 2018

WWW.FAIRVEST.CO.ZA



Date: 04/09/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story