Low logistics assets vacancies for Fortress
Fortress Real Estate Investments has recorded low vacancies for its logistics facilities in SA due to high demand for space.
At the end of October, it had about 173,610m² of logistics space under development, and rental vacancies stood at 0.5%.
Asset recycling, with proceeds used to fund new developments, and various asset management initiatives helped to reduce vacancies in the portfolio, it said.
“Our strategy is working as seen in our record low vacancy rates and positive rental growth in tough operating environments,” said CEO Steven Brown.
In its trading and pre-close update for the first half of 2024, Fortress said after the 2023 financial year it had realised R883m in net proceeds from disposals with a combined book value of R665m.
The company sold land, noncore logistics, industrial and office properties. Five properties with a book value of nearly R375m are held for sale.
Fortress specialises in the logistics and retail property sectors in SA and owns premium logistics assets in Central and Eastern Europe (CEE). It also holds a 24.2% stake in JSE-listed Nepi Rockcastle.
Brown said the Eastport Logistics Park continues to experience high demand for space. One of its tenants, Teraco, will expand its data centre facility, and the company has entered into a conditional agreement to acquire 108,000m² of land adjacent to its existing site.
The additional land will be subdivided, which could take about 12 months, with a sales price of about R1,890/m².
Fortress completed the development of the new Retailability warehouse at Cornubia Ridge Logistics Park in Durban in July and secured a 10-year lease with Dromex for a Cornubia facility.
Other projects include the development of a warehouse facility for Sammar Logistics at Clairwood Logistics Park, bulk earthworks on Clairwood Pocket 5B have started, and the company signed a 15-year lease with CHC Supply Chain Management for a 14,071m² warehouse.
“Due to its proximity to the port, access to the M4 highway, secure park and quality buildings, Clairwood Logistics Park remains the preferred location for prospective tenants,” said Brown.
However, the CEE logistics portfolio recorded a vacancy increase from 3.9% in June to 6.4% at end-October. Brown said the vacancies represent two buildings in Poland, with combined vacancies of less than 10,000m².
Of the 50,000m² warehouse being developed in Poland, 28,509m² has been pre-let on a 10-year lease. The first phase construction of a warehouse in Zabrze, Poland, has started, with half the space pre-let on a fiveyear lease.
Fortress repaid an expiring three-year bond of R560m in October and issued a new R250m three-year bond expiring in November 2026.