Fortress Real Estate Investments Limited has released a significant trading statement and an update on its full-year guidance. The company’s latest announcements shed light on recent developments and future financial prospects following a scheme of arrangement and share conversion.
Scheme of Arrangement and Share Conversion
Fortress Real Estate Investments Limited executed a scheme of arrangement on February 19, 2024, leading to the repurchase of all Fortress B (FFB) shares in exchange for NEPI Rockcastle N.V. (NEPI Rockcastle) shares. Additionally, all Fortress A (FFA) shares were converted into FFB shares. The company also engaged in empowerment settlement transactions, resulting in a reduction of its shareholding in NEPI Rockcastle.
Financial Implications
Following the scheme’s implementation, Fortress now operates with only one class of shares, comprising 1,169,980,307 FFB shares. Previously, dividend declarations were restricted due to the memorandum of incorporation (MOI). However, with the scheme and share conversion completed, these restrictions no longer apply. The board now plans to distribute 100% of distributable earnings to shareholders bi-annually.
Anticipated Dividend Per Share (1H2024):
| Metric | Amount (R’000) | Percentage Change |
|---|---|---|
| Distributable Earnings | 952,868 | – |
| Number of FFB Shares | 1,169,980,307 | – |
| Interim Dividend (cents) | 81.44 | – |
Update to FY2024 Guidance
The company revised its forecast distributable earnings for FY2024 to be between R’000 1,660,000 and R’000 1,720,000, representing a decrease from previously published guidance. This adjustment primarily stems from the reduced number of NEPI Rockcastle shares held by Fortress and the reintroduction of dividends post-scheme implementation. The anticipated dividend for 2H2024 is expected to range between 60.44 and 65.57 cents per share.
Assumptions for Forecast
Fortress bases its forecasts on several assumptions, including no unforeseen tenant failures, successful contractual escalations and renewals, tenant capacity to absorb rising costs, and no changes to tax legislation. Macro assumptions entail no significant economic deterioration and unchanged central bank interest rates.
Financial Review: It’s important to note that the financial information provided has not undergone review or reporting by the company’s auditors.
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