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Audited results for the year ended 30 June 2020 and cash dividend declaration for the six months ended 30 June 2020
FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/005011/06)
Share Code: FVT
ISIN: ZAE000203808
(Approved as a REIT by the JSE)
("Fairvest" or "the Company")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2020 AND CASH DIVIDEND DECLARATION
FOR THE SIX MONTHS ENDED 30 JUNE 2020
1. HIGHLIGHTS
- Distribution for the year decreased by 3.4% to 21.038 cents per share
- Like-for-like property portfolio increased by 1.0% valued at R3.49 billion
- Like-for-like net property income growth of 0.8%
- Vacancies contained at 4.5% of total lettable area
- Tenant retention remained high at 73.2%
- Arrears low at 4.4% of revenue
- Interest cover high at 2.9 times
2. PROFILE
Fairvest Property Holdings Limited is a property investment holding company and 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 262 702 m2 of lettable area, valued at R3.49 billion.
3. SALIENT FEATURES
Dividend per share for the year decreased by 3.4% to 21.038 cents per share, from 21.773 cents per
share in the prior corresponding year. For the six months to 30 June 2020 a gross dividend of 9.883 cents
per share was approved and declared, down from 11.157 cents per share in the prior corresponding period.
The net asset value per share as at 30 June 2020 decreased by 3.6% to 221.18 cents per share, from
229.38 cents per share in the prior corresponding year.
Revenue increased by 8.7% to R532 million, from R490 million in the prior corresponding year.
Headline earnings per share decreased by 48.8% to 10.94 cents per share, from 21.39 cents per share in
the prior corresponding year.
Earnings per share decreased by 45.7% to 12.46 cents per share, from 22.94 cents per share in the prior
corresponding year.
4. PROSPECTS
The COVID-19 pandemic had devastating effects on local economy and the economic
recovery is expected to be protracted. Fairvest is well positioned, with a clearly focused
strategy of mainly investing in grocery anchored assets, servicing non-metropolitan and
lower-LSM markets. These assets proved more resilient during the COVID-19 pandemic,
without significant increases in vacancies. The focus areas for the next 12 months will be
maintaining viable tenancies and letting of vacancies, with a strong focus on the collection
of arrears which accumulated over the last three months of the financial year. The balance
sheet remains conservative, with R132.8 million of undrawn debt facilities to consider
opportunistic yield accretive acquisitions.
The lasting impact of the COVID-19 pandemic and subsequent lockdown of the economy
remain uncertain. In light of the above and given the uncertainty, the board expects the
distribution per share for the 2021 financial year to be at least in line with the current
year's distribution per share.
This forecast assumed no material deterioration in the macroeconomic environment relative
to current levels, that no major corporate and tenant failures will occur, that tenants will be
able to absorb increases in municipal and utility costs, that no further trading restrictions are
implemented by government and no further pandemic outbreaks similar to the COVID-19.
Forecast rental income is based on contractual lease terms and anticipated market related
renewals. This forecast is the responsibility of the board of directors of Fairvest and has not
been reviewed or reported on by the auditors.
The board has resolved to maintain the current dividend pay-out ratio of 100% of distributable
earnings as a dividend. The policy is reviewed on a bi-annual basis and any changes will be
communicated to shareholders at least 12 months before any changes are implemented.
5. DIVIDEND DISTRIBUTION DECLARATION
Fairvest's board of directors has approved and declared a final gross dividend of 9.883 cents per share,
from income, for the six months ended 30 June 2020, payable to shareholders registered as such at the
close of business on Friday, 23 October 2020.
2020
Declaration date Wednesday, 23 September
Last day to trade cum dividend Tuesday, 20 October
Shares commence trading ex dividend Wednesday, 21 October
Record date Friday, 23 October
Payment date Monday, 26 October
Share certificates may not be dematerialised or rematerialised between Wednesday, 21 October 2020 and
Friday, 23 October 2020, both days inclusive.
6. TAX IMPLICATIONS
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").
Qualifying distributions received by shareholders who are South African tax residents must be included in
the gross income of such shareholders (as a non-exempt dividend in terms of section 10(1)(k)(aa) of the
Income Tax Act), with the effect that the qualifying distribution is taxable as income in the hands of the
shareholder. These qualifying distributions are, however, exempt from dividend withholding tax in the
hands of South African tax resident shareholders, provided that the South African resident shareholders
have provided the following forms to their Central Securities Depository Participant ("CSDP") or broker,
as the case may be, in respect of uncertificated shares, or Fairvest's transfer secretaries, Computershare
Investor Services Proprietary Limited ("transfer secretaries"), in respect of certificated shares:
(a) a declaration that the distribution is exempt from dividends tax; and
(b) a written undertaking to inform the CSDP, broker or the transfer secretaries, as the case may be,
should the distribution cease to be exempt from dividend withholding tax,
both in the form prescribed by the Commissioner for the South African Revenue Service ("SARS") and
shareholders are advised to contact their CSDP, broker or the transfer secretaries, as the case may be,
to arrange for the abovementioned documents to be submitted prior to payment of the distribution, if
such documents have not already been submitted.
Qualifying distributions received by non-resident shareholders will not be taxable as income and instead
will be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per
section 10(1)(k) of the Income Tax Act. Any qualifying distribution received by a non-resident from a REIT
will be subject to dividend withholding tax at 20%, unless the rate is reduced in terms of any applicable
agreement for the avoidance of double taxation ("DTA") between South Africa and the country of residence
of the shareholder. Assuming dividend withholding tax will be withheld at a rate of 20%, the net amount
due to non-resident shareholders will be 7.9064 cents per share. A reduced dividend withholding tax rate
in terms of the applicable DTA, may only be relied on if the non-resident shareholder has provided the
following forms to their CSDP or broker, as the case may be, in respect of the uncertificated shares, or
the transfer secretaries, in respect of certificated shares:
(a) a declaration that the dividend is subject to a reduced rate as a result of the application of a
DTA; and
(b) a written undertaking to inform their CSDP, broker or the transfer secretaries, as the case may be,
should the circumstances affecting the reduced rate change or the beneficial owner cease to be the
beneficial owner,
both in the form prescribed by SARS. Non-resident shareholders are advised to contact their CSDP,
broker or the transfer secretaries, as the case may be, to arrange for the abovementioned documents to
be submitted prior to payment of the distribution if such documents have not already been submitted,
if applicable.
Local tax resident shareholders as well as non-resident shareholders are encouraged to consult their
professional advisors should they be in any doubt as to the appropriate action to take.
Shares in issue at the date of declaration of the final distribution: 1 018 125 441
Fairvest income tax reference number: 9205/066/06/1
7. SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the Fairvest board of directors. Shareholders are
advised that this short-form announcement represents only a summary of the information in the full
announcement ("Full Announcement") and does not contain the full or complete details. The Full
Announcement can be found at:
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/FVT/JUN-20.pdf
A copy of the Full Announcement is also available on the Company's website
https://fairvest.co.za/news/results/34 and may also be requested in person, at the Company's registered
office or the offices of the Sponsor, at no charge, during office hours.
Any investment decisions by investors and/or shareholders should be based on a consideration of the
Full Announcement, as a whole.
The annual results have been audited by the Company's auditors, BDO South Africa Inc, who expressed
an unmodified audit opinion thereon. The full auditor's report includes details of key audit matters. This
auditor's report is available, along with the annual financial statements, on the Company's website at
https://fairvest.co.za/news/results.
23 September 2020
Sponsor
PSG Capital
Date: 23-09-2020 07:45:00
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