Wrap Text
Trading and pre-close operational update
FORTRESS REAL ESTATE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share code: FFB
ISIN: ZAE000248506
Bond company code: FORI
LEI: 378900FE98E30F24D975
("Fortress" or "the Company" or "the Group")
TRADING AND PRE-CLOSE OPERATIONAL UPDATE
Shareholders and noteholders are referred to the results announcement for the interim period ended 31 December 2025 ("1H2026"), released on SENS
on 26 February 2026. We hereby provide an update on Fortress' operations for the period subsequent to 31 December 2025.
Fortress is a real estate investment company with a diversified portfolio of high-quality logistics and retail assets across South Africa and
Central and Eastern Europe ("CEE"). The Group owns direct logistics properties valued at R24,1 billion, alongside a South African retail portfolio
valued at R11,9 billion. Fortress also holds approximately R14,4 billion in NEPI Rockcastle shares, providing indirect exposure to one of the CEE
region's leading retail property portfolios. Collectively, these investments offer shareholders access to a real estate platform with a combined
value in excess of R53 billion, supported by a robust development pipeline that underpins future growth.
The logistics sector continues to outperform, supported by sustained demand for premium, secure warehousing. Vacancy levels in the South African
logistics portfolio remain low at 1,4%, while vacancies in the CEE portfolio have declined materially to 1,8%, driven primarily by improved
occupancy at Gdansk Logistics Park. Since 30 June 2025, we have completed 88 292m2 of new logistics space, with a further 65 662m2 currently under
construction. Pre-leasing activity remains strong, underpinned by the superior quality of our assets, which feature best-in-class flooring,
expansive yard areas, and increased eaves heights to optimise racking and volumetric efficiency. These properties are further enhanced by strong
connectivity and access to well-established transport infrastructure.
Our retail portfolio continues to perform well, delivering like-for-like tenant turnover growth of 4,2% while sustaining a low vacancy of 0,8%.
The continued success of our asset management initiatives and the positive impact of recently refurbished and expanded centres are further
contributing to the resilience of this portfolio. We remain focused on ensuring our retail assets remain relevant, competitive and attractive to
both shoppers and tenants.
Our capital recycling strategy, enhancing core assets while disposing of underperforming properties, continues to deliver tangible results. For the
30 June 2026 financial year-to-date, we have disposed of non-core properties with a combined book value of R362,4 million, realising proceeds of
R382,5 million, representing a premium of 5,5% to book value. The average exit yield achieved on disposals, excluding land, during the period was
8,3%. These proceeds have been reinvested into new logistics developments and strategic retail upgrades, extensions and an acquisition. At the date
of this announcement, properties with a combined book value of R277,4 million are classified as held for sale.
Following the Group's consistent operational performance, we reaffirm our distributable earnings forecast for the financial year ending 30 June 2026
("FY2026") of at least R2 150 million, translating into a forecast distribution of at least 176,48 cents per share, compared to 162,44 cents per
share for the financial year ended 30 June 2025 ("FY2025"). The Board further provides earnings guidance for the financial year ending 30 June 2027
("FY2027") of approximately R2 310 million, representing a 7,4% increase compared to FY2026 guidance.
SA logistics and logistics developments
Vacancies, based on rental, in our South African ("SA") logistics portfolio increased to 1,4% at 31 May 2026, compared to 0,3% at 31 December 2025.
This notably low vacancy is a testament to sustained demand for high-quality developments in secure, well-located parks, proactive asset management
across the existing portfolio, and the strengthened overall quality of our logistics platform. This is further underpinned by the successful
disposal of higher-vacancy, non-core assets.
Demand for space at Eastport Logistics Park ("Eastport") remains encouraging. Following the completion of three new warehouses, a 30 296m2 facility
for Liquor Runners, a 20 840m2 facility for Crusader Logistics, and a 12 996m2 facility for Teralco Logistics, only 30 000m2 of gross lettable area
("GLA") remains available for future development at Eastport. The sole vacancy within the park relates to Teralco Logistics' previous 22 095m2
warehouse, which was vacated upon their relocation into the newly constructed 12 996m2 facility. The increase in vacancies in the logistics
portfolio is primarily attributable to this warehouse, which is currently being actively marketed, with encouraging interest from prospective
tenants.
Clippa, an existing tenant at Eastport, exercised its option to acquire the remaining 50% undivided share in their warehouse within the park,
resulting in the disposal of Fortress' remaining 32,5% interest in the Clippa warehouse. The disposal is subject to transfer in the deeds office.
The transaction delivered a total asset return of approximately 20%.
We retain an option to expand north of Eastport, where a further 150 000m2 of development potential exists. We continue to engage with prospective
tenants requiring large warehouse space that cannot be accommodated on the remaining site at Eastport. In addition, we have recently commenced
discussions regarding a site south of Eastport, which can accommodate approximately 90 000m2 of GLA. The broader node surrounding Eastport and
extending along the R21 freeway has firmly established itself as one of South Africa's premier logistics locations, with strong and promising
tenant interest. Our internal development team is currently engaging with several large potential users.
The development of a new 24 507m2 warehouse at Longlake Logistics Park ("Longlake") for Suzuki is scheduled for practical completion in July 2026.
The first warehouse at Longlake, measuring 19 099m2 and previously leased to Liquor Runners, has since been let to Overnight Logistics. Demand for
space at Longlake remains promising, and construction of the 18 982m2 speculative warehouse is on track for completion in August 2026. Upon
completion of these developments, Longlake will be fully developed.
Central and Eastern European logistics and logistics developments
Vacancies, based on rental, across the CEE logistics portfolio significantly decreased from 9,0% at 31 December 2025 to 1,8% at 31 May 2026.
In Gdansk, Rossmann and Stokrotka have entered into five-year leases for 4 152m2 and 4 160m2 respectively, both commencing in April 2026. A further
three-year lease has been concluded with DSV Contract Logistics for 18 930m2, with commencement scheduled for October 2026. The remaining vacant
space of 9 038m2 represents the only material vacancy within the portfolio and is being actively marketed, with interest received from both existing
and prospective tenants.
At Bydgoszcz Logistics Park, construction of the pre-leased 7 346m2 warehouse for Inter Cars was completed and handed over on schedule, with the
10-year lease commencing in May 2026. The 7 020m2 speculative part of Hall C (Phase 3) warehouse was completed in April 2026 and has been leased to
Domitech on a five-year lease commencing 1 July 2026, structured across three phases. The park is now fully developed and comprises 91 500m2 of
completed GLA, with a single remaining vacancy of 2 160m2. Building on the success achieved at Bydgoszcz, we have opened discussions to acquire a
nearby 10-hectare site offering approximately 48 000m2 of developable GLA.
In Romania, we have acquired an 80% share in an additional site measuring 11,5 hectares, offering approximately 61 000m2 of GLA, located in the
north-west of Bucharest near our existing asset, and benefiting from direct access via a new interchange on the A0 ring road.
The table below provides a summary of our logistics park developments in SA and CEE:
Fortress' GLA Let Lease Estimated
ownership (m2) GLA term yield Completion
Logistics park Description/tenant % (100%) (100%) (years) (%)$ date
Developments completed during FY2026 (YTD)
Bydgoszcz (Poland) Hall C (phase 2) - Volcano 100 4 095 4 095 7 8,3* Jul 2025
Eastport Crusader Logistics 2 65 20 840 20 840 10^ 8,5 Aug 2025
Eastport Liquor Runners 65 30 296 30 296 5 8,3& Sep 2025
Stargard (Poland) Hall E (phase 1) - Hine 100 5 700 5 700 10 7,5* Dec 2025
Eastport Teralco Logistics 65 12 996 12 996 3 8,5 Jan 2026
Bydgoszcz (Poland) Hall C (phase 3) - Inter Cars 100 7 345 7 345 10 7,4* May 2026
Bydgoszcz (Poland) Hall C (phase 3) - Domitech 100 7 020 7 020 5 7,4* Apr 2026
Total 88 292 88 292
Estimated
completion
date
Currently under construction
Longlake Suzuki 100 24 507 24 507 8 8,6 Jul 2026
Longlake Speculative 100 18 982 - - 8,5 Aug 2026
Zabrze (Poland) Phase 3 - INNPRO 100 15 120 15 120 5 7,0 Aug 2026
Cornubia Ridge Speculative 50,1 7 053 - - 8,5 Mar 2027
Total 65 662 39 627
Total: 100% of developments 153 954 127 919
* Yield shown in Euro.
$ Development cost in this calculation includes cost of finance, internal project management fees and all other costs.
^ Initial lease period is five years, with an option in favour of the landlord to extend for five years, which we intend to exercise.
& 8,5% effective yield achieved through a stepped lease agreement.
Our current South African development pipeline, excluding land options, comprises approximately 186 000m2 of undeveloped GLA, of which 50 000m2 is
currently under construction and 136 000m2 is available for future development. The total estimated value of the undeveloped GLA within the SA
pipeline is approximately R2,6 billion (or R1,5 billion, excluding the Eastport North and South sites), with completion anticipated over the next
three years.
The table below provides a summary of our logistics parks in South Africa:
Currently under development
Completed Available GLA Let/under Speculative/ Remaining GLA
Ownership Total GLA developments for development offer unlet to be developed
Park (%) (m2) (m2) (m2) (m2) (m2) (m2)
Louwlardia 100 89 656 89 656 - - - -
Eastport 65 318 911 286 517 32 394 - - 32 394
Eastport - Pick n Pay 100 163 533 163 533 - - - -
Longlake 100 99 003 55 514 43 489 24 507 18 982 -
Clairwood 100 297 528 266 716 30 812 - - 30 812
Cornubia 50,1 110 296 56 463 53 833 - 7 053 46 780
Rivergate 100 44 071 18 214 25 857 - - 25 857
Sub-total 1 122 998 936 613 186 385 24 507 26 035 135 843
Eastport North (option) 65 150 000 - 150 000 - - 150 000
Total - SA logistics 1 272 998 936 613 336 385 24 507 26 035 285 843
Our current CEE development pipeline, excluding land options, comprises approximately 228 000m2 of undeveloped GLA, of which 15 000m2 is currently
under construction and 213 000m2 is available for future development. The total estimated value of the undeveloped GLA within the CEE pipeline is
approximately R2,4 billion, with completion anticipated over the next three years.
The table below provides a summary of our logistics parks in Central and Eastern Europe:
Currently under development
Completed Available GLA Let/under Speculative/ Remaining GLA
Ownership Total GLA developments for development offer unlet to be developed
Park (%) (m2) (m2) (m2) (m2) (m2) (m2)
Bydgoszcz 100 91 466 91 466 - - - -
Stargard 100 100 866 47 979 52 887 - - 52 877
Lodz 100 82 294 53 719 28 575 - - 28 575
Zabrze 100 76 499 46 259 30 240 15 120 - 15 120
Gdansk 100 105 989 50 916 55 073 - - 55 073
Wroclaw 100 76 011 76 011 - - - -
Bucharest - ELI Park 100 50 140 50 140 - - - -
Bucharest 2 80 61 000 - 61 000 - - 61 000
Total - CEE logistics 644 265 416 490 227 775 15 120 - 212 645
Retail
Our retail portfolio, predominantly commuter-oriented and focused on convenience shopping, remains defensively positioned. For the 12 months to
30 April 2026, like-for-like tenant turnover increased by 4,2% compared to the prior comparative period, with tenant sales growth continuing to
outpace national consumer price inflation. The retail portfolio achieved a collection rate of 100% for the period from 1 July 2025 to 31 May 2026.
Vacancies, by rental, remained low at 0,8% at 31 May 2026, underscoring stable demand and the continued strength of the portfolio.
We recently acquired a controlling stake of 51% in Balfour Mall. The 37 000m2 suburban retail centre was acquired at a yield of approximately 10%,
resulting in a total acquisition value for 100% of the centre of R175 million. The centre has a high vacancy of 45%, for which no value was
attributed in the initial yield and price. This acquisition was concluded in partnership with local property developers, Consolidated Urban and
Forever Young Capital, and reinforces Fortress' conviction in well-located, community-serving retail assets. Redevelopment plans for the mall
are at an advanced stage, and further updates will be communicated in due course. Operating statistics relating to Balfour Mall have been excluded
from all operating and statistics presented in this announcement.
Extensions and asset management initiatives remain a key focus, while we continue to explore new development opportunities in response to tenant
demand in certain underserved markets.
Central Park Bloemfontein is undergoing a reconfiguration of the upper level to enhance foot traffic and tenancy, alongside improvements to the
bus service offering. The centre has also achieved a 60% reduction in water consumption in ablution facilities following the introduction of
Propelair toilets.
Sterkspruit Plaza will be further expanded by 2 500m2, with the introduction of two hardware stores increasing the centre's total GLA to 22 500m2.
Botlokwa Plaza's extension is progressing well and remains on schedule for completion in November 2026. Letting is at an advanced stage, with the
introduction of 25 new shops and integrated sustainable energy and water solutions set to significantly enhance the overall shopping experience.
The centre will expand by 8 700m2 to a post-development GLA of 16 100m2.
The planned extension of Tzaneen Lifestyle Centre, in which Fortress holds a 25% interest, will add approximately 20 000m2 of GLA and introduce
Pick n Pay, Dis-Chem and a selection of fashion retailers. Earthworks are currently underway, with completion anticipated during the last
quarter of 2027.
Industrial and Inofort
Vacancies in the industrial portfolio increased marginally from 8,6% at 31 December 2025 to 9,1% at 31 May 2026. Of the 23 461m2 of industrial
vacancies, 11 748m2 comprises the office component of these properties, with the majority of this vacancy located in Isando. Well-located, smaller
industrial units remain in demand and interest from potential purchasers for these, as well as the multi-user industrial parks is gaining momentum.
The industrial and Inofort portfolio remain non-core.
Office
Rental vacancies across the office portfolio decreased from 25,7% at 31 December 2025 to 22,1% at 31 May 2026. The portfolio currently comprises
14 properties, of which two are classified as held for sale, with a combined book value of R681 million, representing less than 1,3% of total group
assets. The office portfolio remains non-core.
Vacancies
Total vacancies, based on rental, decreased from 2,8% at 31 December 2025 to 2,3% at 31 May 2026.
Based on rental Based on GLA
May 2026# Dec 2025# May 2026 Dec 2025
Sectoral vacancy % % % %
Total 2,3 2,8 2,6 3,1
Logistics - SA 1,4 0,3 1,4 0,3
Logistics - CEE 1,8 9,0 2,2 8,9
Retail& 0,8 0,8 0,9 0,9
Industrial 9,1 8,6 7,9 7,5
Office 22,1 25,7 23,0 27,3
Other^ 0,0 0,3 0,0 0,3
Information based on Fortress' economic interest in wholly-owned and co-owned properties.
# Vacancy based on the gross rental (100% of GLA and value) of the building.
^ Includes residential units and serviced apartment properties.
& Excluding Balfour Mall.
Direct property disposals
We continue to sell non-core properties, with total disposals for the FY2026 financial year-to-date amounting to R382,5 million against a
corresponding book value of R362,4 million. The average yield achieved on disposals, excluding land, during this period was 8,3%.
Notwithstanding ongoing geopolitical uncertainty stemming from the conflict in the Gulf, the South African direct property market has demonstrated
resilience and continues to exhibit strong competitive depth, underpinned by consistent participation from both investors and owner-occupiers.
The following properties have transferred since 30 June 2025:
Book value
Net proceeds Jun 2025 Transfer
Property name Sector (R'000) (R'000) date
Otto Volek Road Pinetown * Industrial 112 000 112 000 Oct 2025
Clovelly Business Park Midrand Industrial 83 000 75 042 Oct 2025
Parc Nicol Office 41 081 38 000 May 2026
8 Milkyway Avenue Linbro Park Logistics 30 500 27 743 Feb 2026
100 Dekema Road Wadeville # Industrial 18 000 20 047 May 2026
560 Malcolm Moodie Crescent Jet Park Industrial 17 500 15 780 Oct 2025
9 Milkyway Avenue Linbro Park Logistics 14 600 12 629 Sep 2025
Greenbushes *^ Land 12 803 12 803 Jul 2025
66 Kyalami Boulevard Industrial 9 750 7 901 Feb 2026
Hilston Street Kya Sands Industrial 9 500 9 496 Sep 2025
Greenbushes *^ Land 7 217 7 217 Aug 2025
Lakeview Business Park 3 Industrial 6 000 4 854 Nov 2025
Lakeview Business Park 4 Industrial 5 900 4 772 Jan 2026
Lakeview Business Park 5 Industrial 5 800 5 205 Jan 2026
Montague Business Park *^# Land 4 513 4 513 Oct 2025
Wynberg Workshops Block B *^# Industrial 4 330 4 374 Aug 2025
Total 382 494 362 376
* Held for sale at 30 June 2025.
^ Portion of the property.
# Fortress' pro-rata share.
The following properties are currently held for sale, none of which have yet transferred:
Book value
Net proceeds Jun 2025
Property name Sector (R'000) (R'000)
Mahogany Road Logistics 126 000 103 952
Monyetla Office Park Office 75 500 65 000
Eastport Logistics Park - Building 4 (Clippa) # Logistics 75 108 73 003
Lakeview Business Park 11 Industrial 22 000 18 493
17 Kosi Place Umgeni (leasehold) Office 17 300 17 000
Total 315 908 277 448
# Fortress' pro-rata share.
Energy and water solutions
We remain firmly committed to expanding our solar photovoltaic ("solar PV") capacity across our property portfolio. At present, we have 113
operational solar PV systems with a total installed capacity of 38,84MWac, an increase from 103 plants totalling 36,75MWac at 31 December 2025.
We are currently on site with a further nine installations of which seven will be operational by 30 June 2026. This will take us to the target
of having 120 installations totalling 40MWac completed by 30 June 2026. By 30 June 2027, our goal is to commission an additional eight plants,
bringing the total number of installations to 130 and increasing overall capacity to 42MWac.
The ongoing roll-out of solar PV infrastructure has meaningfully increased our renewable energy generation. Between July 2025 and May 2026,
we produced approximately 50,334MWh of solar energy, 26,6% more than the 39,765MWh generated during the same period in the previous year.
We have installed three battery energy storage systems totalling 1,95MWh, at one retail centre and at two logistics assets, to enhance our returns
from the solar PV installations. Orders have been placed for a further seven installations (5,1MWh) at three retail and four logistics properties.
We expect the first plants to be online by July 2026.
Further to the above, we are exploring several early-stage opportunities to utilise the expansive rooftop space of our logistics portfolio for
additional solar PV installations to further enhance the income produced by our assets.
190 Propelair toilets have been installed across eight retail centres and our head office in Morningside. A further 104 toilets will be installed
at seven retail assets. To date we have saved an estimated 14,29 million litres of water from these installations.
NEPI Rockcastle
NEPI Rockcastle released its final results for the financial year ended 31 December 2025 on 24 February 2026 and subsequently released a
comprehensive business update on 14 May 2026, both available on its website at www.nepirockcastle.com. The current value of our investment in
NEPI Rockcastle is approximately R14,4 billion.
Funding, liquidity and treasury
In March 2026, Fortress further strengthened its funding profile through the successful issuance of new R561 million three-year and R495 million
five-year notes under the DMTN programme, both linked to 3-month JIBAR. In April 2026, following the successful bond auction concluded in
March 2026, we raised a further R1,6 billion seven-year note under the DMTN programme in April 2026, the first listed property company in
South Africa to issue a ZARONIA-referenced note.
In June 2026, Fortress cash settled a R380 million note maturing under the DMTN programme. We furthermore early-settled a R700 million RMB facility
in May 2026. We secured new in-country, five-year debt funding of EUR32,4 million through BNP Paribas, further enhancing funding diversification and
liquidity within the offshore platform.
Our hedging strategy remains consistent with that of previous periods and comprises approximately 80% caps and 20% swaps. This structure positions
us to benefit from potential reductions in interest rates, given the higher proportion of caps, while still maintaining protection in the event of
rate increases.
We remain fully compliant with the key performance indicators associated with our sustainability-linked notes, consistent with previous reporting
periods, and we are on track to meet our June 2026 targets.
We maintain strong liquidity, with R7,6 billion in cash and available facilities. The Group's financial position remains solid, with a loan-to-
value ratio of approximately 38,8% at the date of this announcement, comfortably within all covenant thresholds and well positioned to repay
expiring facilities of R905 million under the DMTN programme, maturing in August 2026.
We currently have a collar over 18,75 million NEPI Rockcastle shares. The put strikes range from R110 to R122, and call strikes range from R145
to R168 respectively, with maturities between August 2026 and March 2027. We retain the dividends on these shares as well as the risks and rewards
of ownership.
Outlook and guidance
We reaffirm our distributable earnings forecast for FY2026 of at least R2 150 million, which translates into a forecast distribution of at least
176,48 cents per share for FY2026, compared to 162,44 cents per share for FY2025.
The Board further provides distributable earnings guidance for FY2027 of approximately R2 310 million, representing a 7,4% increase compared to
FY2026 guidance. This forecast is based on the following assumptions:
Assumptions that the directors can influence
- Our distributable earnings methodology will remain consistent with that of prior periods, as previously communicated;
- No material sales, or acquisitions, outside of our planned pipeline occur which necessitate a revision to this forecast; and
- Contractual escalations and market-related renewals will be achieved with no major change in vacancy rates.
Assumptions that are outside the influence of the directors
- NEPI Rockcastle maintains a 90% payout ratio and meets its published distributable earnings per share guidance for their financial year
ending 31 December 2026;
- There is no unforeseen failure of material tenants in our portfolio;
- Tenants will be able to absorb the recovery of rising utility costs and municipal rates;
- There is no unforeseen material macroeconomic deterioration in the markets in which Fortress has exposure;
- There are no unforeseen adverse socio-political and geo-political events in the jurisdictions in which Fortress has exposure;
- There are no changes to current tax legislation in the jurisdictions in which the Company operates; and
- There are no changes to current interest rates by the European Central Bank or the South African Reserve Bank.
The FY2026 distributable earnings forecast and FY2027 distributable earnings guidance have been prepared in accordance with the Company's
accounting policies and in compliance with IFRS. The forecasts have not been reviewed or reported on by Fortress' external auditor and are the
responsibility of the board of directors.
10 June 2026
Lead sponsor
Java Capital
Debt sponsor and joint equity sponsor
Nedbank Corporate and Investment banking
Date: 10-06-2026 05:25:00
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