Fortress pays dividends
SHAREHOLDERS’ PAYDAY WILL SEE IT REGAIN ITS REIT STATUS
The group was one of best-performing stocks in terms of share price last year.
Fortress – one of the three largest SA-based property stocks in terms of JSE market capitalisation – returned to paying dividends to shareholders on Friday by declaring an interim dividend of 81.44 cents a share.
The move comes as the group finally managed to convert its dual share structure into a single share structure last month, an issue that has bogged down the company in recent years, forcing it not to pay dividends and last year seeing it lose its SA real estate investment trust (Reit) status. Fortress’ return to paying a dividend is likely to see it regain its Reit status.
And shareholders have even to be more happy about, as the group opted to make a 100% distribution payout for the half-year ended 31 December last year (HY2024).
Fortress is one of the only companies in the listed property space to do so.
“The board has a policy of paying out 100% of the Fortress-defined distributable earnings on a semi-annual basis. The Fortress distribution methodology is generally more conservative than our industry peers,” the group noted in its interim results Sens release.
Fortress reported a 19% surge in distributable earnings for the half-year, to R952.9 million (versus R800.9 million for HY2023).
“The board has declared the full distributable earnings available as a dividend, which amounts to 81.44 cents per FFB share,” its Sens said.
Despite the challenges around Fortress’s previous dual “A-share” and “B-share” structure, the group was one of the best-performing stocks in terms of share price last year.
After finally securing shareholder approval for a single-share structure last month, its share price “jumped” – more than doubling. However, this highlighted the much-needed “unlocking of value” more than anything.
“The highlight of our 2024 financial year so far has been the approval by our shareholders of the simplification of our capital structure through the repurchase of all the FFB shares,” declared Fortress CEO Steve Brown on Friday.
Fortress focuses on the logistics property sector as well as the convenience and commuter-oriented retail property segments of the market. In SA, its major logistics developments include the likes of Eastport Logistics Park in Gauteng and Clairwood Logistics Park, near the port in Durban.
At the end of HY2024 (31 December 2023), the group held a 24.2% stake in CEE-focused Nepi Rockcastle NV – the largest overall listed property company on the JSE, with a €7 billion (about R140 billion) portfolio.
“A consequence of the repurchase of all the FFB shares, in exchange for roughly one-third of our interest in Nepi Rockcastle, is the reduction in our [Fortress] shareholding from 24.2% to 16.2% [in Nepi Rockcastle],” Brown noted in the group’s latest Sens.
“With the new capital structure and single share class, we are pleased, for the first time in our history, to be able to offer our shareholders a scrip dividend alternative. This will enable our shareholders optionality between a cash distribution or additional shares, another positive feature of the single share structure,” he added.
Commenting on Fortress’s latest results, independent listed property analyst Keillen Ndlovu said the group’s 100% payout is noteworthy.
“Paying dividends attracts investors who are looking for income as well as investors with leveraged schemes [who need to pay interest]. In addition, Fortress is offering a scrip dividend for those who elect to reinvest in the business at a discount. It’s a unique combination in the sector – full dividend payout and a scrip dividend option,” he said.