Acquisitions increase Fortress’ exposure

FORTRESS is increasing the group’s exposure to new logistics warehouses in line with its strategy.

The listed hybrid real estate investment trust (Reit) that invests in both physical property and listed property shares made several acquisitions of prime-zoned land for development in the year to June.

These included the group’s acquisition of 50 percent of the 500 000 square metre R21 Logistics Park, 120 000m² Cornubia Logistics Park and 23 000m² 3rd Avenue Linbro site and 100 percent of the 93 000m² Louwlardia Logistics Park and 45 000m² Westlake Logistics site.

The group has commenced development on the Louwlardia Logistics Park and Westlake Logistics, both of which are expected to be completed in February while construction of the Montague Business Park is scheduled to be completed in October.

Mark Stevens, the managing director of Fortress, said yesterday that the group had received environmental impact assessment (EIA) and zoning approval for its proposed Clairwood Logistics Park in Durban.

Stevens said construction of this logistics park would commence once approval for the environmental management plan was received. He said demand from logistics users was strong for this strategically located development site.

Stevens said the group had concluded a new 15-year lease at Tradeport City Deep with the C Steinweg Bridge Group for the joint development of a new 30 000m² logistics facility.

He said a new 16-year lease was concluded with the C Steinweg Bridge Group on the existing 19 084m² warehouse, which would be incorporated into the joint development.

Fortress owns retail portfolio of 58 shopping centres.

Stevens said the portfolio had been further enhanced by the completion of extensions at Nelspruit Plaza and Botlokwa Plaza and the redevelopment of Biyela Square and Central Park Bloemfontein. He said ongoing development at The Galleria, the construction at Lephalale Crossing and the new extension at Lebowakgomo Centre was scheduled to open in November.

Refurbishment projects undertaken at Venda Plaza and Rustenburg Plaza and development at Jeffreys Bay were also expected to be completed in November.

Stevens said the difficult conditions in the office market continued and five buildings were sold during the year and exposure to this segment would continue to be reduced in line with the board’s mandate.

Fortress yesterday reported a 4.91 percent year-on-year growth in dividends a share of its A-shares to 129.17c in the year to June, while the dividend for its B-shares improved by 95.28 percent to 137.50c.

Stevens attributed the substantial growth in the dividend of the B-shares in the financial year largely to the acquisition of all the issued shares of Capital Property Fund via a scheme of arrangement.

He said logistics, industrial and office properties performed in line with budget, but the turnover rentals collected on retail properties for the year was R3.5 million ahead of budget.

Total vacancies declined to 5.7 percent from 6.2 percent in December.

He said Fortress’s equity investments generally performed in line with budget, with Resilient outperforming.

Fortress has also invested in Hammerson, New Europe Property Investments and Rockcastle.

Based on the assumption the A-share dividend would grow by 5 percent, Fortress’s board anticipated the B-share dividend would increase by about 22 percent, he said.

Shares in Fortress rose 2.39 percent yesterday to close at R34.72.