Fortress Real Estate’s Stellar Performance: Record-Low Logistics Vacancy, 7.2% Retail Growth, and Renewable Energy Commitment

  • Logistics Strength: Fortress Real Estate boasts a record-low 0.5% logistics vacancy, driven by strategic development and recycling capital.
  • Retail Resilience: Despite a tough consumer environment, Fortress's retail portfolio sees a 7.2% turnover increase and reduced vacancies to 1.3%.
  • Renewable Energy Commitment: With 33 operational solar plants and ongoing projects, Fortress remains dedicated to a significant solar PV footprint.
By Lethabo Ntsoane

Fortress Real Estate Investments Limited has unveiled robust operational results post the fiscal year 2023, showcasing a resilient performance in the face of global real estate challenges.

Logistics Portfolio: Sustained Growth Amidst Challenges

Fortress reported a remarkable low logistics vacancy rate of 0.5% by rental, attributed to strong demand for well-located, high-quality logistics space. The company has 173,610m² of logistics space currently under development, with strategic asset recycling and capital reinvestment playing a pivotal role in maintaining positive rental growth.

SA Logistics and Logistics Developments

  • Vacancies in the South African logistics portfolio remained at 0.5%.
  • Strategic land sale to Teraco for 108,000m² with a sales price of approximately R1,890/m².
  • Ongoing developments in Cornubia Ridge and Clairwood Logistics Parks.

CEE Logistics and Logistics Developments

  • Central and Eastern European logistics vacancies increased to 6.4%, driven by specific buildings in Poland.
  • Notable developments in Łódź and Zabrze, with pre-let agreements and ongoing construction.

Retail Resilience: Navigating a Deteriorating Consumer Environment

Fortress showcased a robust retail portfolio, emphasizing commuter-centric and convenience retail nodes. Despite a challenging consumer environment, turnover increased by 7.2%, and retail vacancies decreased from 1.5% to 1.3%.

Recent Retail Developments

  • AbaQulusi Plaza extension opened, featuring major tenants like Shoprite, Clicks, Woolworths, and more.
  • Successful introduction of Capitec and Clicks at Park Central.
  • Advanced planning for Sterkspruit Plaza extension.

Renewable Energy Commitment: Expanding Solar Footprint

Fortress remains committed to establishing a significant solar photovoltaic (“solar PV”) footprint. With 33 operational plants totaling 11.8 MWac and more in progress, the company is actively contributing to renewable energy.

Financial Overview: Prudent Management and Liquidity

Fortress continues to strategically manage its finances, having disposed of non-core properties for net proceeds of R883 million post FY2023. The company maintains a healthy liquidity position, with a total of R3.6 billion in cash and available facilities at the group level.

Key Financial Indicators

MetricValue
Unencumbered Asset Ratio38%
Loan-to-Value RatioApproximately 35.5%
Total Vacancies (Oct 2023)3.3%

Scheme of Arrangement: Shareholder Meetings Set for January 19, 2024

Fortress has detailed the terms of the proposed scheme of arrangement and the conversion of Fortress A shares to Fortress B shares. Shareholder meetings are scheduled for January 19, 2024.

In a firm intention announcement, Fortress revealed an increased shareholding in NEPI Rockcastle N.V. to 24.2% from 23.9% at the end of June 2023.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo