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FORTRESS REIT LIMITED - Pre-close operational update

Release Date: 18/06/2021 10:55
Code(s): FFB FFA FIFB19 FIFB18 FIFB14 FIFB16 FIFB17 FIFC36 FIFB15     PDF:  
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Pre-close operational update

FORTRESS REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes:     FFA ISIN: ZAE000248498
                     FFB ISIN: ZAE000248506
Bond company code:   FORI
LEI: 378900FE98E30F24D975
(Approved as a REIT by the JSE)
(“Fortress”)


PRE-CLOSE OPERATIONAL UPDATE


Shareholders and noteholders are referred to the interim results announcement for the six-month period ended 
31 December 2020, released on SENS on 10 March 2021. We hereby provide an update on Fortress’ operations.

Logistics and logistics developments

Shareholders and noteholders are referred to the SENS announcement published on 17 May 2021 wherein we
advised that Fortress has entered into a binding agreement to develop a new distribution centre for Pick n Pay 
at our Eastport Logistics Park (“Eastport”). Salient details of the agreement were contained in that announcement
and development activities have commenced on the site.

We have let a building with a gross lettable area (“GLA”) of 20 232m2, scheduled for completion in July 2021,
to online retailer Takealot and we are furthermore in negotiations with a prospective tenant for a completed
building measuring 13 756m2 at Eastport. We have let an additional 14 257m2 of GLA at Clairwood Logistics
Park to Super Group on a five-year lease.

Retail

On a like-for-like basis for the nine-month period ended 31 March 2021, compared to the nine-month period
ended 31 March 2020, tenant turnover figures in our retail portfolio have increased by 0,9%.

Our retail portfolio, comprising of CBD, Rural, Suburban and Township centres, continues to show its
defensiveness in this challenging trading environment.

Vacancies

We present a summary of the vacancy per sector at 31 December 2020 and 31 May 2021 in the table below. The
vacancies are forecast to reduce once properties with high vacancies have transferred, most notably 409 West
Street and Oak Avenue Highveld. The vacancy in the core retail and logistics portfolios remains satisfactory.

                                                          Based             Based
                                                         on GLA            on GLA
                                                       Dec 2020          May 2021
Sector                                                        %                 %

Total (including CEE*)                                      6,8               9,0
Logistics – South Africa                                    4,3               4,5
Retail                                                      5,3               5,3
Industrial                                                  7,9              14,3
Office                                                     26,8              34,5
Other^                                                      2,9               2,9
Logistics – CEE                                               -               5,5

Information based on management accounts.
* Central and Eastern Europe.
^ Includes a hotel, residential units, motor dealerships and serviced apartment properties.
Direct property disposals

Our disposals programme of non-core properties has continued successfully. Total disposals for the financial
year-to-date are R1,51 billion in net proceeds against a book value at 30 June 2020 of R1,46 billion. The
following properties have transferred since 30 June 2020:

                                                                                       Book
                                                                            Net       value
                                                                       proceeds    Jun 2020      Transfer
Property name                                      Sector                 R’000       R'000          date
                                                                                                   
Cornubia Ridge Logistics Park (49.9% share)#       Logistics            454 289     416 326      Dec 2020
Louwlardia Logistics Park – Building 2 (WAG)       
(50% undivided share)                              Logistics            154 500     154 500      Aug 2020*
Sunnyrock Close Germiston                          Industrial            91 130      91 130      Jun 2021
Protea Centre                                      Retail                83 000      83 000      Sep 2020
Nongoma Shopping Centre                            Retail                80 200      70 000      Jun 2021
Eastport Logistics Park (65% share) – land         Logistics land        71 175      58 693      Nov 2020**
portion only
38 Isando Road Isando^                             Industrial            70 000      75 510      Mar 2021
Shoprite Port Shepstone                            Retail                67 320      68 000      Oct 2020
30 Bell Street Hennopspark^                        Industrial            51 500      52 000      Mar 2021
Elliot Avenue Epping                               Industrial            45 000      45 000      Nov 2020
2 Drakensberg Drive Longmeadow                     Logistics             39 500      41 210      Dec 2020
Modderfontein Road Longmeadow                      Other - Motor
                                                   dealership            32 725      31 400      Dec 2020
204 Rivonia Road Morningside (Blocks C and         Office                30 830      30 830       Aug and
E)                                                                                               Sep 2020**
Nywerheid and Evergreen^                           Industrial            28 000      28 951      Apr 2021
189 Monte Carlo Crescent Kyalami                   Office                26 235      26 235      Sep 2020
Makhado Square                                     Retail                25 750      31 000      Jun 2021
122 Koornhof Road Meadowdale^                      Industrial            23 000      23 197      Jan 2021
Louis Trichardt Street Nelspruit                   Industrial            22 500      22 500      Sep 2020
8 and 16 Harry Street                              Industrial            22 000      23 740      Nov 2020
Brunton Circle Founders View South                 Logistics             18 000      19 680      Dec 2020
Lakeview Business Park (No. 9)^                    Industrial            15 000      12 700      Apr 2021
Broad and Simmonds Streets                         Industrial            14 550      14 550      Jul 2020
4 Neutron Street Linbro Park^                      Logistics             14 250      13 700      Apr 2021
Groblersdal Centre                                 Retail                 7 700       7 500      Nov 2020
Library Office Park^                               Office                 6 750       8 000      Feb 2021
Bart Street Wilbart                                Industrial             5 940       5 940      Nov 2020
Sharland Street Driehoek^                          Industrial             5 700       7 620      Mar 2021
                                                                      1 506 544   1 462 912

# Book value at transfer date, net of impairment.
* Effective date sale transaction was August 2020 with transfer in March 2021.
** Effective date transaction. Proceeds have been received. Not yet transferred.
^ Held for sale at 31 December 2020

The following properties are classified as held for sale:
                                                                                    Book
                                                                        Net         value
                                                                   proceeds        Jun-20
Property name                     Sector                              R'000         R'000    Transfer date
                                                                              
Oak Avenue Highveld               Office                            123 500       127 000                @
409 West Street                   Retail                             83 000        82 500                @
Pelican Park Jet Park             Industrial                         60 021        59 380                @
                                                                    266 521       268 880
@ Not yet transferred.

Billings and collections

Since January 2021 we have collected 99,8% of total billings.

Funding, liquidity and treasury

At 31 May 2021, Fortress had a total of R3,0 billion of cash and available facilities and remains comfortably
within all debt covenants.

Fortress’ loan-to-value ratio at 31 May 2021 was approximately 37,9%.

Outlook

Shareholders and noteholders are referred to the SENS announcement published on 21 May 2021 whereby
dividend guidance per Fortress A and per Fortress B share was withdrawn in respect of the six-month period
ending 30 June 2021.

18 June 2021


Lead sponsor           Joint sponsor                                     Debt sponsor
Java Capital           Nedbank Corporate and Investment Banking          Rand Merchant Bank
                       (a division of Nedbank Limited)                   (a division of First Rand Bank Limited)


Date: 18-06-2021 10:55:00
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