Niki Vontas, CEO of Fairvest and a director of Bonatla, said yesterday that Fairvest planned to dispose of its entire property portfolio, effectively turning it into a cash and share shell.
 
It would to "unlock the maximum value" for its linked unit holders.
 
"We plan to delist Fairvest in the next few months," said Vontas.
 
Vontas said the sale consideration would most probably exceed the acquisition price.
 
Fairvest, which had a market capitalisation of about R40m, was too small to compete with the other leviathans in the listed sector, he said.
 
"If you want to be involved in the listed property company, the various criteria have changed. You have to go for a larger company with an adequate capital structure," Vontas said.
 
Vontas made a similar statement when he announced on July 1 that Bonatla would most probably delist in the next three months.
 
The planned delisting of Fairvest comes as no surprise to listed property asset management company Provest, which is part of Investec Bank and manages R1,5bn worth of listed property stock.
 
Angelique de Rauville, the managing director of Provest, which also conducts monthly research on the listed property sector and issues quarterly reviews, said that unless companies with small market capitalisations merged or were acquired by other property companies, there was no place for them in the listed sector.
 
"They can?t compete with the larger funds, and it is very costly being a listed company," De Rauville said.
 
She said small stock companies could not justify the expenses associated with being a listed company.
 
De Rauville said only a "minuscule" "miniscule" R6m worth of Fairvest-linked units were traded in the last year.
 
Fairvest also released its interim results for the six months ended March 31 this year 2003 and announced that despite an increase in turnover of 36,1%, from R21,02m in the previous period to R28,6m, the operating profit had decreased by 3,1% to R13,8m. The increase in revenue was attributed to the additional acquisition of properties.
 
The company reported a profit of R10,3m as it said it was certain to dispose of its property portfolio in the next few months.
 
This corresponded to headline earnings of 13,29c for each linked unit versus an adjusted headline loss of 1,57c .
 
Vontas said the adjusted loss was due mainly to the cost of selling off the entire portfolio.
 
The company reported that although its total debt ratio remained unchanged at 56%, finance charges had risen increased to R15,6m due to the debt on additional properties transferred and the "comparatively higher" interest rates.
 
Fairvest said that during the period under review, the net annual rental income yield was 13,1% with a total expense ratio of 34,8%.
 
The company reported that vacancy levels of 19% prevailed.
 
Fairvest said the linked unit holder value had not been reflected in the share price due to a combination of high interest rates, an inadequate return from certain properties and its capital structure.
 
The company announced that no dividend distribution would be made for the period under review.
 
Fairvest also advised investors to exercise caution when dealing in the company?s linked units, saying that a detailed circular to linked unit holders regarding the disposal of its property portfolio was expected to be issued next month.