Fortress more than doubles ’A’ dividend and grows into the logistics market
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Fortress, the real estate investment trust (Reit) operating in the South African and Central and Eastern European (CEE) markets – more than doubled its dividend for the year to June 30.
This followed a strong operational recovery at its convenience retail and logistics focused properties, and in spite of a 10.6 percent drop in group revenue to just over R3.2 billion.
The final dividend of 74.70 cents for A shareholders was more than double 23 cents per share previously, results out Friday showed. It did not declare a dividend for its “B” shares. Typically, Fortress B units are a function of the residual distributable income after the A shares are paid.
Some R1.65bn of property was sold in the year. Loan-to-value decreased to 36.7 percent from 38.5 percent at the end of the 2020 financial year.
Fortress said its long-term strategy to pivot the business to a one-third convenience retail and two-thirds logistics real estate portfolio in South Africa, and invest further into Europe, helped South Africa’s leading logistics property operator to show significant growth in net asset value of 12.9 percent.
“The long-term focus, even when the pandemic hit, allowed us to continue to shore up our balance sheet and grow liquidity through the sales of non-core assets, CEO Steven Brown said.
Recycled capital had been invested in acquiring and developing logistics parks in South Africa and more recently, CEE, he said.
“Our global diversification strategy is gaining traction. We concluded our second deal in CEE by finalising the acquisition of our first directly held logistics park in Romania in July. This follows two recent logistics park acquisitions in Poland in December,” he said.
The group is also the largest shareholder in NEPI Rockcastle who are active in high-growth retail real estate in CEE and which recently produced strong results despite the pressures from lockdowns over the period.
“With a strong global vaccination drive on the horizon, we look forward to a more normalised operating environment. The recent volatility has resulted in more demand in our logistics portfolio as well as our pipeline of logistics developments in SA and CEE.”
Modern and safe logistics parks were more in demand, with more clients looking to have a robust and localised supply chain. Retailers in e-commerce also needed more warehouse space.
“We have received a significant uptake in enquiries about our logistics developments and have let all our newly developed warehouses measuring a staggering 163 127m², all in our own logistics parks,” he said.
Over the last 18 months leases for the development of over 400 000m² of state-of-the art logistics boxes at key nodes in Gauteng and KZN were concluded.
The sale of 29 properties in the past year of R1.64bn was largely done at a premium to book value of 2.8 percent.
There had also been a resurgence in trading in the commuter and convenience retail portfolio, which had better trading than the comparatives for 2019. Overall vacancy in the property portfolio reduced to 7.4 percent from 8.9 percent at June 30.
Eight new solar PV plants were installed, with a further 10 at various stages of procurement or feasibility assessment.
BUSINESS REPORT ONLINE