Africa-Press – South-Africa. JSE-listed property group Fortress Real Estate on Monday upped its guidance for its full-year distribution by almost 5%, saying it continued to see strong demand for its logistics properties in SA, as well as falling vacancies in its retail portfolio.
The group, valued at about R20 billion on the JSE, expects distributable earnings of at least R1.74 billion of its year to end June, having guided R1.66 billion in early March. The company booked earnings of about R1.71 billion in 2022.
Fortress said in a pre-close update on Monday that it was still seeing a strong demand for secure, high-quality logistics space, both local and offshore. This, coupled with higher borrowing costs and construction cost inflation, has translated into higher asking rentals for speculative developments and better rentals for its standing portfolio.
The company had a direct property portfolio worth R32.1 billion at the end of December, more than half of which was logistics, while about a third was retail. Fortress also holds a 23.7% stake in Europe-focused real estate group NEPI Rockcastle.
Vacancies, based on rental, in its SA logistics portfolio reduced from 3.3% at the end of December 2022 to 1.2% at the end of May, it said on Monday.
The company said its retail portfolio, which is focused on essential goods and services in convenient locations and commuter nodes, saw vacancies decrease to 2% from 2.8%, while achieving like-for-like tenant turnover growth of 7%.
“The strategic focus on extending and refurbishing our existing retail centres is proving fruitful and we plan to continue to dispose of underperforming assets and use this capital to enhance our portfolio of conveniently-located and commuter-focused shopping centres,” CEO Steven Brown said in a statement.
“While the logistics property sub-sector is not immune to the macroeconomic challenges the country faces, it remains well-positioned to weather the storm, given that fundamentals are robust relative to other real estate sub-sectors,” he said.
In January, the company had lost its status as a REIT, after shareholders had rejected a scheme late last year to collapse its dual-share structure. Fortress A shares get preference for dividends, using a benchmark that is adjusted for the prior distribution and inflation, while the B shares receive the remaining earnings.
The group’s A shares were down marginally on Monday afternoon but have risen more than 14% over the past year. Click here for details of its shares as well as other info.
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