Fortress Real Estate Investments has published its results for the six-month interim period ended 31st December 2024, declaring a 29.8% increase in its distributable earnings per share to 76.15 cents per share when compared to its normalised distributable earnings per share for the same period in 2023.
Fortress’ portfolio of logistics properties in South Africa and Central and Eastern Europe are currently valued at R20.3 billion with a portfolio of retail assets in South Africa valued at R10.7 billion. It also holds approximately R16 billion in NEPI Rockcastle shares. These combined holdings provide its shareholders with exposure to an approximate R50 billion real estate portfolio with a significant development pipeline.
The Group says its strategic shift into higher-growth and better-quality assets is bearing fruit, resulting in lower vacancy rates and improved like-for-like net operating income (NOI) growth across its core logistics and retail portfolios and particularly from its retail portfolio with 9.2% like-for-like NOI growth, stemming largely from recent and ongoing refurbishments and extensions as well as the disposal of underperforming assets.
Fortress’ logistics portfolio achieved like-for-like NOI growth of 4.7% during the six months and it continues to benefit from low vacancies due to limited new developments in the market with increased demand for larger warehouses in secure logistics parks. The Group says that the portfolio’s historical negative reversions, due to lease escalations being above the market rental growth for several years, have started to improve, ascribing this partly to the rise in construction costs which has necessitated an increase in asking rentals for new, prime logistics developments and which has buoyed most of the rental market.
Its industrial portfolio, while remaining non-core, continued to outperform expectations with another strong period of growth. The portfolio includes the Inospace portfolio which has once again performed well.
Fortress’ strategic exit from its office assets has made progress with its disposal of R259.2 million of office properties thus far in the current financial year. The assets were sold marginally above its most recent book values with the proceeds recycled into its core asset portfolio. The Group says it currently has R897 million of office assets remaining which represents only 1.6% of its total assets.
The Group supported NEPI Rockcastle with its growth ambitions by participating in the accelerated bookbuild in October 2024 for an amount of €100 million. NEPI Rockcastle utilised the additional capital to acquire top-quality, dominant retail assets. Fortress offered a portion of its investment in NEPI Rockcastle to its shareholders in lieu of a cash dividend for H1 2025.
Its loan-to-value ratio (LTV) as at 31st December 2024 is 39.9%.
